- The IRS on December 30 published new rules regulating the collection practices of non-profit hospitals. The new rules come in reaction to aggressive collections tactics used by some hospitals—such as a Missouri hospital that filed 2,300 lawsuits against patients in 2013 (compared to 26 filed by another system).
- Under the new rules, non-profits may not charge patients eligible for financial assistance more for emergency or other medically necessary care than what would typically be billed to a patient covered by Medicare, Medicaid or commercial insurance.
- The new rules also prohibit non-profits from reporting a patient's debt to credit agencies or garnishing wages until the hospital makes a reasonable effort to discern if the patient is eligible for financial assistance under hospital policy. This still leaves the ball in the hospital's court: While non-profits are required to provide charity care, it is up to the hospital to set its own benchmark for eligibility.
The hospital in the limelight for the kind of aggressive practices this rule impacts is Heartland Regional Medical Center in St. Joseph, recently featured in a ProPublica expose. The hospital is part of Mosaic Life Care and has its own for-profit debt collection agency.
According to the hospital, it gives patients multiple opportunities to take advantage of financial assistance before it takes legal action. According to Heartland's Media and Community Relations Coordinator Tracey Clark, "To manage and control healthcare costs for all, it is our obligation to attempt to collect from those who have the ability to pay, but choose not to."
The take-away here is the ongoing struggle non-profits face in determining how to handle charity care requirements. While Heartland has taken the legal route, other hospitals may choose to deny charity care to patients who qualify for ACA exchange subsidies but don't take advantage of them. According to Modern Healthcare, three hospital systems have engaged that policy: Trinity Health, an 86-hospital Catholic system; Broward Health, a tax-supported safety-net system in South Florida; and The Southern New Hampshire Health System.
The jury is still out on whether either of these solutions addresses the basic problem these systems are facing: How to motivate the uninsured to get insured and reduce hospital costs.