New Orleans With the passage of the Affordable Care Act, hospitals were on notice. Costs were out of control and people were going to be looking. Prices were going to be made public so some patients could compare. Hospitals were going to be able to be ranked by health outcomes. Accountability was coming!
This was especially true for nonprofits, thanks to a late amendment by Senator Charles Grassley, Republican from Iowa, their charitable contributions were going to be tracked to see if they aligned with their tax-exempt requirements. The IRS was going to be doing the checking and the enforcement. The penalty for not providing charitable care could be loss of the tax benefits, which would be a fatal diagnosis for most nonprofit hospitals. Reports indicate that the exemption is worth $9 billion. They were given a number of years to get their act together, but the years since the passage of the Act meant that time has now come and gone.
What is the accounting now? How is it working out? We found that trying to parse the IRS 990s to determine the real level of charitable care was often whack-a-mole, where researchers with ACORN International and Labor Neighbor Research & Training Center were often trying to find the real charitable expenditures hidden in obfuscation. Many nonprofit hospitals tried to claim the difference between their “sticker prices” for care and the Medicaid reimbursement rate as “charity.”
A recent report on Virginia hospitals in JAMA, the Journal of the American Medical Association, the doctors’ union and trade association, according to the Becker Hospital Review found that,
“…36 percent of hospitals in Virginia garnished patient wages to collect payment for medical bills in 2017. Most of the hospitals that garnished wages (71 percent) were nonprofit. Researchers note their findings “suggest hospitals with greater financial need (nonprofit, lower annual gross revenue) may be pursuing debt collection to the final stage of garnishment.” Those that garnished wages recorded average annual gross revenue of $806 million and garnished an average of $722,342 in wages, or $2,783 per patient.”
Virginia hospitals are not outliers. The Wall Street Journal quickly reported that hospitals in Arizona followed the same playbook. The hospital system connected to the University of Kentucky tried to use the Kentucky state revenue system to help collect their bills. John Hopkins in Maryland was a big litigator. All of this is after a raft of stories several years ago and reports by Pro Publica and others of nonprofits for whom debt collection was more central to their business plan than good patient care.
All of this is in the face of prohibitions in the Act that were supposed to curtail such practices, if not eliminate them entirely. As the Journal reminded, the Act requires that,
“…hospitals must post and provide information on their financial-assistance policies and send notices that they are planning to sue. They also must limit the amount charged to the uninsured and wait four months before using stepped-up collection efforts such as filing a lawsuit.”
Ignoring the law, human decency, and the proscription that they “do no harm,” such practices define impunity.
If the IRS can’t do its enforcement job, then states, prosecutors, and the Justice Department need to step up, while the rest of us need to hit the streets before more patients are sentenced to poverty for the bad fortune of experiencing bad health.