State goes extra mile with new charity policy
'It's more inclusive than the norm'
All the community hospitals in the state of Washington are voluntarily expanding their financial assistance guidelines in what is being described as one of the more far-reaching policies of its kind in the United States.
"It's fairly comprehensive — more inclusive than the norm," says Cassie Sauer, MSW, vice president of communications for the Washington State Hospital Association (WSHA) in Seattle. "We didn't do extensive research, but that is the indication from conversations [with colleagues] in other states."
The new guidelines ensure that the low- and moderate-income uninsured are charged a moderate fee for their care, she adds. "At most, they are charged what a typical insured patient would be charged."
Patients who fall within 300% of the federal poverty guidelines, meaning those with an income of up to $60,000 a year for a family of four, qualify for the program, Sauer says. "We didn't go above that amount because we do believe that above that income level people can afford to purchase insurance and not having it is more of a choice."
That conclusion is supported by a Robert Wood Johnson study indicating that about 20% of those who are without insurance actually could afford to buy it, she adds.
The American Hospital Association is featuring the Washington state program as a leadership model, Sauer notes.
Another goal of the program is to better inform patients of available assistance, she says. "Some hospitals provide charity care, but do patients even know about it? What are the standards in place to make sure they know it exists?"
With that in mind, the policy states that hospitals must provide more information to that effect, Sauer says. "Every patient will receive written notice about financial assistance, either at check-in, upon discharge, or with the bill."
The highlights of the new policy, which provides three levels of discounts depending on the patient's income level, are as follows.
- Patients whose income is between zero and 100% of the federal poverty level ($20,000 for a family of four) receive free care.
- Uninsured patients whose income is between 100% and 200% of the federal poverty level ($40,000 for a family of four) will be given a discount. The discount is calculated so that, on average, the most these patients will be asked to pay is the cost of care at that hospital.
- Uninsured patients with limited assets who are at between 200% and 300% of the federal poverty level ($60,000 for a family of four) also qualify for a discount. The discount is calculated so that, on average, these patients are asked to pay what an insured patient may pay, even though the uninsured have no one negotiating on their behalf.
Commercial insurers typically negotiate a discounted rate because they drive volume and referrals to the hospital, Sauer notes.
One of the key provisions of the policy specifies that hospital boards will increase their oversight of collection policies, she explains. "Every year, [boards] should receive a report on what collections actions were taken on behalf of each hospital."
In addition, hospitals will establish clear and consistent procedures that must be followed before accounts can be sent to a collection agency, Sauer says. The idea, she adds, is to eliminate instances in which, for example, one financial counselor sets up a payment plan for a patient while another sends an identical account to collections.
Part of the impetus for the new policy was a bill proposed in last year's state legislative session that would have expanded financial assistance requirements "beyond what we thought reasonable."
The proposed legislation "was overly burdensome and would have put a lot more regulations on hospitals," Sauer adds.
Although the bill did not pass, the state hospital association responded by assuring legislators that it would address the issues that it deemed reasonable, she says.
"A lot of times, the initial bill is good but then they start adding this and that," Sauer points out. "We told [legislators] we would work to address their main concerns."
Those concerns centered around whether the uninsured were being charged a fair price or given the very highest bill, whether people were being informed about the availability of financial help, and whether collection practices were fair, she says.
Over-the-top collections practices — such as a $10,000 bill turning into a $100,000 bill because of interest charges or people being arrested or losing their homes — were not identified as a problem with the hospitals that WSHA represents, Sauer says, but the association highlighted the issue as a preventive strategy.
Choice easier for some than others
While CEOs at all the community hospitals have signed the financial assistance pledge, she notes, some did so more readily than others. (See pledge at end of article.)
"Some signed in August and September [2006] and some signed in the middle of December," Sauer says. "We started the effort in May and spent about six months asking them to sign. For some it was an easy choice, and for some it was more challenging."
Hospitals expressed legitimate concerns, she says. "Some were already providing [financial assistance] at this level or close to it, but for some it was a big expansion. In rural areas, 300% [of the federal poverty level] includes almost everyone."
Because all of the hospitals did agree to participate regardless of those concerns, Sauer says, "we pledged to them to go back and let legislators know the impact of this on providers."
Although the legislation referred to above did not pass, Washington is one of a few states that does have a law, enacted in 1990, governing charity care, she points out.
But while other states with charity care laws typically have developed mechanisms to fund the care provided, that has not been the case in her state, Sauer says.
In Washington, the Medicaid program gives only limited funding to a few hospitals that provide a large amount of charity care and small grants to hospitals for a portion of their charity costs, according to a report prepared by the state hospital association. However, the report continues, there is no charity care pool to pay hospitals for all their charity care costs.
The report points out that hospitals often charge more than the cost of care for insured and self-pay patients, and that low government payments are a primary reason for the high charges. (See charts below.) Since government payers do not cover the cost of care, the report continues, the unfunded burden must be shifted to patients with insurance.
(Editor's note: Cassie Sauer can be reached at [email protected].)
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Charity care pledge signed by WA hospitals
All the for-profit, nonprofit, and public district hospitals in the state of Washington have signed the following pledge as part of an initiative aimed at expanding financial assistance guidelines to offer discounts to more residents.
Footnotes to the pledge explain that "uninsured" means no third-party insurance and health savings accounts are considered insurance. They also specify that income for those under 100% of the federal poverty level includes both earned and unearned income but excludes assets; income for those above 100% of the poverty level may include assets.
Finally, cost-to-charge ratios are based on the previous year's year end reports filed with the Washington State Department of Health.
Hospital voluntary effort on billing to the uninsured
These proposals are meant to supplement existing charity care policies and are not intended as a replacement. There are already requirements in law governing notification, collection practices, and sliding scale discounts. These proposed standards would be added to the current requirements. We are also proposing minimum standards for hospitals and anticipate many hospitals will be able to offer broader policies.
Notification (applies to all patients)
- All hospitals will provide a written notice to all patients informing them about the availability of financial assistance.
Collection practices (applies to all patients)
- All hospitals will have their governing board or commissioners receive and review an annual summary report on collection actions taken.
- All hospitals have a written policy as to when and under whose authority an account is sent to collections.
- All hospitals have a written policy as to when a lien is placed on a primary residence.
Discounts (applies to the uninsured for medically necessary inpatient and outpatient services):
- No uninsured patient with income under 100% of the federal poverty level is required to pay for care.
- No uninsured patient with an annual income under 200% of the federal poverty level is required to pay more than the estimated cost of their care. (Cost is the charge multiplied by the hospital's average cost-to-charge ratio.)
- No uninsured patient with an annual income under 300% of the federal poverty level is required to pay more than 130% of the estimated cost of their care. (Cost is the charge multiplied by the hospital's average cost-to-charge ratio).
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