Protecting and Promoting Charity Care

Protecting the Amount of Charity Care

You will first need to locate information about how much charity care was provided in the past by the hospital. You may be able to access this information through the hospital's: 1) filings with the state agency charged with the task of receiving hospital financial information; 2) IRS 990 filings; 3) annual financial reports or 4) community benefits reports, depending on the state's community benefits law. While the historical amount of charity care provided by the nonprofit hospital is important, it is also critical to research the level of charity care provided by the new buyer.

At a public hearing on the sale of nonprofit St. Luke's to nonprofit Sutter Health, the California Attorney General asked Sutter Health how much charity care it had provided at California Pacific Medical Center (CPMC), one of its other nearby hospitals in San Francisco. Sutter Health claimed this information was not available, but Consumers Union was able to provide research showing that St. Luke's provided an average of 7 times more charity care than CPMC. As a result of this research, the Attorney General imposed conditions on the St. Luke's transaction regarding the provision of charity care, requiring that the hospital: 1) continue for five years the policies and procedures that were in place before the sale; 2) quantify charity care in cost and 3) provide at least $2 million per year in charity care.

What You Can Do:

• Find out whether the same level of charity care provided in the past will be provided in the future, and if so, for how long.
• Ask how the historical amount of charity care was calculated (i.e., by cost or charges) and where this information was reported.
• Find out what method will be used to calculate charity care and how it will be reported in the future.
• Ask if this information will be made public and if the hospital will be penalized for failing to maintain its charity care commitment.
• Get a written commitment through commenting pressure and/or regulator involvement.
• Check out whether prior and promised levels comport with state and federal legal requirements.

Promoting Adequate Charity Care Policies and Practices

Equally important to the charity care amount are the hospital's policies and practices regarding charity care. Therefore, it is critical that you obtain the hospital's charity care policy that has been in place prior to the conversion. The fact that a hospital says it provides charity care is meaningless if the hospital does not have appropriate policies for informing the public about its availability, and for processing charity care applications in a fair and speedy manner. It is very important that you review the charity care policies at the hospital and determine which of the policies will be continued after the conversion and which will be changed.

Hospital policies relating to charity care vary widely by individual hospital, community and state. When reviewing a charity care policy, you should pay particular attention to the eligibility requirements, when and how a hospital notifies a person that charity care is available, and the requirements for applying. Oftentimes, financial eligibility is reflected as a percentage of the Federal Poverty Guidelines, or FPG, and the hospital provides a form that must be completed by the patient. There is, however, very little consistency in hospital charity care policies and implementation. Some hospitals have an informed staff member who can provide guidance to patients. Some also post signs informing patients about the availability of charity care and an information number to call. Other hospitals treat charity care as "Top Secret," and do not tell anyone about it, not even the staff.

What You Can Do:

• Ask questions about what, if any, charity care policies and practices will be continued after the conversion and how long these\ measures will be in place.
• If the buyer intends to cut charity care, insist that current levels continue. Argue that regulators are responsible for minimizing the health impact of the conversion, and that this requires maintaining existing charity care practices.
• Find out how patients will be informed of the availability of charity care.
• Ask who will oversee the provision of charity care in the future.

When bankrupt Logan General Hospital was proposed to be sold to a for-profit system, the asset purchase agreement stated that the buyer would maintain the hospital's charity care policies. The policy at the time of the sale, however, stated that the hospital would not provide any more charity care than was required under the federal Hill-Burton law. Hill-Burton was a 1946 federal loan program making money available for hospital construction costs and requiring them to provide medical services to eligible people regardless of their ability to pay. Advocates determined that, at the time of the sale, Logan General had already fulfilled its Hill-Burton requirement. In fact, under the policy, the hospital and the new buyer would not be obligated to provide any charity care at all. After raising this issue in filings with the court, a new charity care policy was implemented, incorporating several components of Consumers Union's Model Free Accessible Individual Rate (FAIR) Care Hospital Policy (PDF).