Tag Archives: charity care

Nonprofit Hospitals Are “Confused” About Charity and Profits

New Orleans       Over the last several years, ACORN International and the Labor Neighbor Research & Training Center have been collecting and analyzing the IRS 990 forms filed by tax exempt, nonprofit hospitals in Arkansas, Louisiana, and Texas.  This is a project driven by our “volunteer army,” so it has risen and fallen as our soldiers have entered or deserted the battlefield.  We have been immeasurably assisted though by student interns from Tulane University in New Orleans and the University of Ottawa in Ontario, Canada.  We collected most of the 990s three years to four years ago and are now collecting the most recent filings in order to compare the numbers and finish the report.

What are we looking for, you might correctly wonder?  We’re looking at the level of charity care, which is the essence of extremely valuable federal tax exemption enjoyed by these institutions.  Believe it or not, it’s not easy to find, and once found, is often abysmally small compared to what you would expect for institutions receiving the benefit.

A recent piece by Dr. Danielle Ofri in the New York Times noted that,

“An analysis by Politico found that since the full Affordable Care Act coverage expansion … revenue in the top seven nonprofit hospitals (as ranked by the U. S. News & World Report) increased by 15 percent, while charity care – the most tangible aspect of community benefit – decreased by 35 percent.”

This is a confounding observation which tracks the work we have been doing as well.  On one hand the “community benefit” is the test the IRS uses to determine whether a healthcare institution continues to be deserving of the tax benefit.  On the other hand, it flies in the face of the requirement in the Affordable Care Act that the IRS monitor and check charity care to assure that it increases under the ACA at penalty of pulling the tax exemption for non-compliant institutions.

Dr. Ofri  joins us in noting that some of these hospitals are also trying to claim a community benefit essentially by cooking the books.  In some cases, they are trying to write off the difference between their inflated sticker price for procedures with the more realistic, and lower, rate that Medicaid allows for a reimbursement by calling a “loss.”   Believe it or not!

When we began our work the average level of charity care around the country was roughly 4%.  Seems low, doesn’t it?  Nonetheless, we took that number as a comparative benchmark.  The giant Hermann Memorial in Houston was hardly half of that number.  The rapidly expanding billion dollar, Ochsner Hospital network based in New Orleans was hardly 1%.

We’re worried that the numbers are going down rather than up for charity care.  Iowa’s Republican Senator Church Grassley had insisted on this amendment to the Affordable Care Act.  Next year he will have served forty years in the Senate.  If charity care is going down, rather than up, we have to wonder if he’s still really on the job.


Hospitals Shirking on Financial Assistance

view-overall-inpatient-billKiln, Mississippi    When the doctors’ union, the American Medical Association Journal of Ethics rings the bell on the horrid practices of hospitals, you know we have a tiger by the tail – and we’re in danger of continuing to be hurt badly!

The Journal looked at 140 hospitals to see how they were preparing for the mandatory rule taking full effect this January under the Affordable Care Act of providing financial assistance to lower income families. What they saw wasn’t pretty, although we could have told them that from our close inspection of many hospital IRS 990 forms in Texas, Louisiana, Arkansas, and other states.

First the Journal confirmed the fact that finding the information, even for them, and certainly this has been the case for us, was like finding a needle in a haystack. They looked at a random sample of 140 hospitals across fourteen states. In their survey, they found that half of the institutions did not say on their websites whether they were public, private, or nonprofit. Needless to say, their reporter was web savvy which also wouldn’t be true of many families desperate to find if the hospital offered any help. So, transparency, not! Also, not surprisingly, they found that for-profit hospitals generally had not voluntarily created financial assistance policies in line with what nonprofit, tax exempt hospitals are now required to do.

But here comes the real rub in what the Journal found and it goes to the heart of the vagueness of the IRS requirements for financial assistance in this new rule:

…hospital financial assistance policies vary significantly in terms of generosity and terms. Among the sample of financial assistance policies from 140 hospitals, eligibility cutoffs for financial assistance ranged from an income of 100 percent of the federal poverty level (FPL) to 600 percent of the FPL. Many hospitals with financial assistance policies offered free care to those with incomes up to 100-200 percent of the FPL and sliding scale discounts above that threshold. However, some hospitals did not offer any free care and only offered moderate discounts even to the poorest patients. Of the hospitals in the sample that provided eligibility information based on insurance status, a quarter excluded those with insurance from their financial assistance policies altogether.

Bottom line, if your wallet is a bit light, you better start doing some research so that when you get sick you can find that 600% hospital or you are up a creek with no paddle. And, for those hospitals that exclude any lower income family from financial assistance if they have any insurance at all regardless of the deductible, we, and all those like us, need to start figuring out a way to challenge their tax exempt so-called charitable status.

The Journal was also clear about the hospital rip that starts with the “rack” rates for cares or charge master rates.

Hospitals routinely charge uninsured patients undiscounted “chargemaster” prices, the “rack rates” or list prices of the health care industry, while government and commercial payers receive substantial discounts of 50 percent or more of the chargemaster prices for their members

Yes, you are hearing this right. If you are covered with insurance, your bill is discounted. If you are uninsured and out of luck, your bill is essentially doubled!

The Journal argues that California provided a model that would have been immeasurably better and that has worked well for hospitals and patients in that state.

California’s Hospital Fair Pricing Act… limits how much California hospitals may charge uninsured patients who earn less than 350 percent of the FPL or insured patients whose medical bills exceed 10 percent of household income

Unless a miracle happens in the next several months, like the old song, we’re all going to wish we were living in California. When the doctors of all people in the AMA start calling out hospitals as bloodsuckers, you know we’re in a fight for our lives.


Please enjoy the Wallflowers’ Back to California