Many nonprofit hospitals have "far from perfect" performance on a requirement of the Affordable Care Act to notify patients who qualify for charity care.
Nonprofit hospitals must let patients know if they qualify for free or reduced-price care if they don’t have health insurance or their insurance leaves them with gaps causing large bills, according to the Affordable Care Act (ACA)’s new Section 501(r) rules. Nonprofit hospitals that fail to let patients know they qualify for financial assistance can lose their tax-free nonprofit status.
This same section in the ACA also requires these hospitals to charge patients fairly even if they don’t qualify for free or reduced-price care.
However, a new study published in the New England Journal of Medicine from the University of Michigan Ann Arbor’s Institute for Healthcare Policy and Innovation found that many nonprofit hospitals have “far from perfect” performance ratings on this requirement 1 year after the rule was implemented.
Sayeh S. Nikpay, PhD, MPH, and John Z. Ayanian, MD, MPP, wrote that their review of Internal Revenue Service (IRS) forms submitted by more than 1800 nonprofit hospitals nationwide for 2012 (the first year hospitals had to comply with the ACA’s requirement and the most recent year for which data are available) found much room for improvement.
Although 94% of the hospitals reported having written charity care and emergency care policies to guide decision-making on which patients qualified for free or reduced-price care (a requirement of the ACA), only 29% of the hospitals reported they had begun charging uninsured and underinsured patients the same rate that they charged private insurers or Medicare (rates that are often much lower than the “chargemaster” rates hospitals set as the starting point for negotiating with insurers about how much they will actually accept).
“Financial protection for patients is an under-recognized component of the ACA, and it’s important that hospitals are required to have policies, that they disclose these policies, and that they enable people to apply for help in a timely way,” said Dr Ayanian, adding that this is particularly important for patients living in states that have not expanded Medicaid to cover people with lower incomes.
Drs Nikpay and Ayanian are continuing to study the issue as new IRS data become available. They are already working on 2013 data.