Variable charity care rules risk medical debt for patients

A variable patchwork of charity care provisions in the U.S. is leaving low-income patients on the hook for navigating healthcare costs and putting them at risk for incurring serious medical debt, according to a new analysis from the Lown Institute.

The report, which examined charity care policies at 2,500 hospitals across the country, showed that there is little to no federal standard for charity care eligibility. Although hospitals are expected to provide charity care -- free or discounted care to patients with low incomes -- there is no federalized way of doing this.

That leaves some patients qualifying for charity care at some hospitals but not at others, creating serious healthcare navigation burdens and leaving them liable for incurring medical debt.

"This isn't a case of red states versus blue states, or rural areas versus cities," Vikas Saini, M.D., president of the Lown Institute, said in a statement. "We're seeing massive disparities in charity care policies between hospitals that are practically around the corner from each other. Unfortunately, low- and middle-income patients are the ones who deal with the consequences."

A sizeable proportion (87%) of the hospitals included in the report offer free care, the Lown Institute said. These hospitals typically tie charity care to location, insurance status and the type of service or treatment received.

But although it is common for hospitals to offer charity care, whether a patient is eligible to receive it will vary. Free-care thresholds range from 100% below the federal poverty level ($25,000 for a family of three) to up to 600% ($150,000 for a family of three).

As Saini noted, these thresholds can vary even within the same city. For example, a family of three earning $100,000 would get free care at Beth Israel Deaconess Medical Center in Boston, but not at Brigham and Women's Hospital.

A similar issue would arise in New York. The family could get free care at Tisch Hospital, but not at New York-Presbyterian.

This patchwork of charity care provisions is problematic, especially given some hospitals' lack of consumer transparency. Although 99% of private nonprofit hospitals publicly outline their financial assistance plans online, only 57% of public nonprofit and 49% of for-profit hospitals do the same. Around three-quarters of private nonprofit and for-profit hospitals provide this information in multiple languages, compared to just 43% of public hospitals that do the same.

Still, this requires some healthcare expertise on the part of the patient. Even though hospitals might announce their charity care requirements online, patients need to know that eligibility can look different depending on the facility and should look for those protocols online.

This comes as the nation stares down a patient health literacy problem. The Center for Health Care Strategies says nearly 90% of U.S. adults struggle with health literacy, while 2019 data from the Department of Health and Human Services found only 12% of American adults have proficient health literacy.

"When hospitals fail to make access to assistance easy and predictable, it drives people away from care and erodes trust in our entire system," Saini explained. "Right now, the burden is on patients to navigate a broken system. That has to change."

Without the skills and knowledge to navigate the healthcare system -- including provisions about charity care and medical debt enforcement actions -- patients might find themselves in the crosshairs of serious financial burden.

The Lown Institute researchers indicated that the problem is derived from a lack of federal or statewide standards for charity care. State or federal policymakers should consider establishing minimum eligibility standards for free or subsidized charity care, as well as certain eligibility checks like a uniform application form.

Sara Heath has covered news related to patient engagement and health equity since 2015.