An investigation by Kaiser Health News this week found about half of nonprofit hospitals — including several facilities in Kentucky — are charging patients and turning them over to collection agencies even though they may qualify for free medical care.
The investigation looked at what’s called “bad debt;” this refers to bills that patients haven’t paid, have been put into collections and hospitals eventually give up on recouping. Hospitals report how much bad debt they have to the Internal Revenue Service, and also how much of that debt came from people who may have qualified for big discounts on their bills.
Several Kentucky hospitals have self-reported that as much of half of the medical debt they’ve given up on collecting are from people they estimate would have qualified for so-called “charity care.” Nonprofit hospitals are required to provide these discounts for patients with low incomes in exchange for tax benefits.
The Kaiser findings included Kentucky entities like Grayson County Hospital Foundation in Leitchfield, which runs Twin Lakes Regional Medical Center. There, 52 percent of the bad debt Twin Lakes had given up on collecting came from patients who would have been eligible for discounted or free care.
In a statement, Director of Marketing Jamie Bittel said that the hospital doesn’t necessarily know if a patient has a lower income and qualifies for charity care unless a patient asks for help.
“If the customer contacts us about their bill and state they are having trouble paying the bill, we speak to them about their payment options,” Bittel said. “We will offer them discounts if they feel that they can go ahead and pay the bill off. If they call and cannot afford payments, nor pay it off in full even with a discount, then we speak to them about financial assistance.”
The Internal Revenue Service sets rules about how a hospital must tell patients about its financial assistance policy. Patients must be notified in the hospital, and information on the financial assistance has to be found with a clearly visible link on the hospital’s website. There’s no such link, however, on the Twin Lakes website; a patient has to search for the financial assistance forms.
And that’s not uncommon. The Kaiser Health News investigation found that some hospitals had not told patients in person about the policy, and some had told staff to ask for payment three times before mentioning a financial assistance or charity care policy.
Crittenden Community Hospital in Marion said it meets all the IRS’ requirements. It self-reported that half of the bad debt it’d given up on collecting came from patients who would have qualified for discounted or free care. CEO Don Buchanan said they tell every patient about the discounted bill policy and there’s information on the hospital’s website. But it’s up to patients to apply.
“We tell everybody when they come in about our charity care policy. Whether it gets thrown in the trash — I don’t know where it goes. You know, whether they read it or not,” Buchanan said.
A consultant who worked with the Internal Revenue Service on gathering charity care data from hospitals told Kaiser Health News that there are many reasons a patient might not apply.
“The signage might be a little hard to find, applications are complicated, documentation is complicated,” said Keith Hearle.
Hospitals also don’t know a patient’s financial situation unless that patient discloses it — so the estimate of potential charity care patients is just that, an estimate. And the data from hospitals is self-reported, and the IRS doesn’t advise hospitals on how to calculate that number.
Baptist Health which owns several hospitals in the state including in Louisville, reported that 28 percent of its bad debt came from potential charity care patients. Its financial assistance policy offers full assistance for incomes of up to about $50,000 for a family of four. It also offers partial discounts for incomes above that, according to Charles Colvin, Baptist Health’s vice president of revenue cycle.
“They [employees] are trained to recognize situations that indicate that the financial resources of a patient may be inadequate,” Colvin said.
He said Baptist Health’s bad debt from people who were eligible for charity care may come from people who were eligible for only partial charity care. Their policy goes up to 1200 percent of the federal poverty level, and includes a wide swath of patients.
“An organization that offers assistance to patients with even higher resources has different dynamics that come into play,” Colvin said.