More Eyes Join Us on Nonprofit Hospitals’ Lack of Charity Care

ACORN International Affordability Arkansas Hospital Accountability Labor Neighbor Louisiana Non-Profit Texas

            Marble Falls      For years, we have felt like we were beating a drum that no one hears.  Frankly, when it comes to the refusal of many tax-exempt, nonprofit hospitals to meet the requirements of their estimated $60 billion annual tax benefit to actually offer charity care, it should be a scandal, but seems to be met instead by either a yawn or head scratching, either pretending that the issue and numbers are too complex, or that the institutions are too large and powerful to be held to account.  Tragically, though our studies are often deliberately ignored, including by the press, we can take some wry comfort in the fact that investigative reporting by the New York Times recently and now the Wall Street Journal also seems to be ignored as well, and though late to the game, they are at least suiting up finally.

Here’s what the latest report from the Journal found:

  • Though hospitals have the power to prequalify low-income patients for charity care and never send a bill, about 450 nonprofit facilities—roughly 15% of the 3,100 nonprofit facilities in the Journal’s analysis of tax documents—didn’t report using the option.

  • Even among the hospitals that told the IRS they do prequalify people, many spent months chasing patients for payment before checking eligibility. The parent organizations for roughly 1,000 of those facilities reported pursuing at least $2 billion in billings to patients who likely qualified for aid.

  • In scripts and other training material for staff who talk to patients about bills, obtained through public-record requests to more than 100 government hospitals, the possibility of financial assistance is sometimes raised only as a last resort, or not at all.

The Journal reporters did an exhaustive search of 990 tax documents required by the IRS for all tax-exempt nonprofits to file, as well as public records requests.  One of the things that stands out that ACORN, LNRTC, and Local 100 in our Hospital Accountability Project didn’t document as thoroughly in our work is the impunity and callousness that is embedded in the business model of many of these institutions.  Major credit outfits offer tools that would pre-emptively qualify patients who fit the financial requirement for free care, including Medicaid eligibility, but often tax-exempt hospitals don’t avail themselves and instead create elaborate, complicated eligibility procedures as rocks in the road to block lower-income patients.

The Journal reports,

Nearly 2,700 nonprofit facilities reported in tax forms that they do use presumptive eligibility. But roughly 40% of that group belonged to parent organizations that reported pursuing payments from patients who were likely eligible for financial assistance—for a total of around $2 billion worth of “bad debt,” or billings that they ultimately failed to collect. That could reflect that hospitals performed the presumptive eligibility checks only after they had billed patients for months, or that they didn’t run the checks on all patients, according to Keith Hearle, president of Verité Healthcare Consulting LLC, which advises nonprofit hospitals.

Presbyterian Healthcare Systems in New Mexico for example spends six months trying to collect money before checking eligibility.  The script for Georgia-based Augusta University Health System bill collection staff runs down the ladder of demands to patients from full-pay to 75% to 50% to 25%, before informing patients that they may be eligible for free care.

In our studies, we only looked at tax-exempt nonprofits in Arkansas, Louisiana, and Texas, but as the Times and Journal have found, this is a national issue, where charitable healthcare institutions are exploiting lower income, eligible families, despite the clear requirements for charitable care.  A “2020 poll of 820 registered votes in Maryland…found that 29% of all respondents, and 50% of Black respondents, weren’t aware of bill forgiveness for low-income patients.”

There’s a reason for this.  They aren’t being told.  Hospitals don’t want them to know.  The IRS is not enforcing the requirements for this care, even under the Affordable Care Act mandates, and Congress, state, and local officials, and the press are not holding these fake nonprofits to account.  When is enough, going to be enough?