PB: As a state association that focuses on knowing both laws and regulations for hospitals, we felt last fall that we needed to offer guidance for our members that pull together federal requirements as well as state-specific requirements. The guidelines give hospitals in Pennsylvania a checklist for them to periodically reevaluate their policies, as well as how those policies are put into action.

PB: For tax-exempt hospitals there are federal tax laws where you have to meet a community benefit standard, and the provision of health care services is recognized as that. At the state level there are two laws. One of them affects tax-exempt institutions – Act 55 of 1997, The Institutions of Purely Public Charity Act – and requires hospitals and other nonprofit entities wanting to qualify for state tax-exemption to meet five particular requirements: advancing a charitable purpose, donating or rendering gratuitously a substantial portion of its services, benefiting a substantial class of persons, relieving the government of some burden, and operating entirely free from private profit motive. In 2001, when Pennsylvania enacted the Tobacco Settlement Act, known as Act 77, it created as a use of the tobacco money an ability for hospitals to qualify for some direct payments for uncompensated care or for extraordinary cases of uninsured patients. To receive any monies under the tobacco settlement you must have a charity care policy in place that addresses a series of issues, very consistent with the Act 55 requirements, as well as having a plan in place to serve the uninsured.

PB: The community benefit standard that was established by the Internal Revenue Service in 1969 doesn’t prescribe a minimum charity care requirement. Pa.’s Act 55 was pretty specific in its criteria. When you’re donating or rendering gratuitously a substantial portion of services, tax-exempt entities have to meet at least one of several tests. You have to maintain an open admissions policy and provide uncompensated goods or services not less than three percent of total operating expenses. You have to provide financial assistance to at least 20 percent of the institution’s clientele according to their ability to pay. The goods or services rendered to at least five percent of the clientele are not charged for. There are about five or six more.

Under Act 77, if you’re a hospital in Pa. and you’re treating large numbers of uninsured patients, you may qualify for uncompensated care payments from the tobacco settlement money. The state only makes about $80 million available each year for these uncompensated care payments, while the uncompensated care burden in Pa. hospitals is almost half a billion dollars annually. To be eligible to receive any of that state money, you have to have a charity care policy that articulates income eligibility thresholds, that recognizes you will work with individuals to see if they’re eligible for other resources – for example, if it was an auto accident case, they may be eligible for coverage under an auto policy. Your charity care policy has to address issues around employment status and earning capacity so that individuals who are economically able to pay their bills should pay their bills, and for those who aren’t, you could have a sliding scale. Your charity care policy should identify other sources of funds available to the hospital that can be used to care for patients. Some hospitals might have dedicated funds for providing support to cancer patients, for instance. In addition, as a hospital, you have to have a plan in place to serve the uninsured, which must indicate that you accept all individuals regardless of ability to pay for emergency medical services, that you will take reasonable steps to seek collection of a claim, either from the individual or other insurance they may have available, and that you will work to help those individuals obtain health care coverage, such as assisting them to apply for Medical Assistance, Children’s Health Insurance Program or adultBasic. Determination of coverage can never delay emergency admission or treatment. You must post adequate notices regarding the availability of medical services and charity care in waiting rooms or admissions offices. And so, to be able to receive any money directed towards uncompensated care, a hospital in Pa. has to have both a charity care policy and a plan to help the uninsured. About 178 general acute care hospitals, out of a total of around 250 hospitals in Pa., qualify for this uncompensated care money. I don’t want to imply that those that don’t quality for the uncompensated care payments aren’t necessarily meeting these principles. There is a methodology that the state goes through to determine how they’re going to divvy up that limited amount of money, so people may be meeting these policies but do not meet the threshold of having a sufficient amount of uncompensated care to merit these monies.

PB: Nationally, it’s over 3,000. I don’t have numbers for Pennsylvania.

PB: After AHA released their guidelines, we wanted to make sure that our guidelines added the Pa.-specific requirements. We were able to tell our hospitals that if you were meeting the requirements of Act 55 or of Act 77, you were meeting the AHA’s guidelines. Our guidelines emphasize the importance of boards of hospitals reviewing their charity care policies, which Pa. hospitals have had a long tradition of having, against some standards and principles that meet both the state and federal laws but also reflect the community mission of the hospitals. Our guidelines give a series of principles so that they can make sure they have considered these issues when they’re preparing their financial aid policies, and more importantly, assuring that that policy as adopted is practiced, real, vibrant and living. We provide guidance on how to make sure that there’s proper education for employees, that your communication to patients and to community organizations working with the uninsured are periodic, and in language that those individuals will understand. We go into detail on how you should communicate, and who you should communicate with, to make sure that your practices reflect your policy. We also add the same kind of detail around collection policies – how to make sure that your bill collection policies do not intimidate people in terms of seeking emergency care. Hospitals often may contract with collection agencies. If you have a charity care policy, you’ve got to make sure that whomever you contract with practices in accordance with your policy and make sure that it’s fair, reasonable and non-threatening.

PB: We believe that hospital charity care policies clearly need to state what the income eligibility is, and that must also reflect family size, individual financial resources and other financial obligations relative to the existing federal poverty level. You should not be expecting payment for patients eligible for your financial assistance in amounts that are greater than you would get from federal or state sponsored insurance programs. If you’re eligible for financial aid because your family income and size is such that you’re just barely above the federal poverty level, a payment should not exceed what might have been paid under Medicare or Medicaid. Financial aid eligibility criteria ought to involve uniform, objective calculations based on pertinent criteria. Pennsylvania is a very economically diverse state. You can have a higher cost of living in some parts of the state than in others, and so our guidelines say that the hospital needs to do that evaluation, set its level of what would qualify for financial aid, and then apply it consistently. If you’re talking about people who have the economic wherewithal to pay a bill and to seek health insurance, but choose for whatever reason not to, it’s appropriate to charge them for the services.

PB: That’s worked out with those individuals. But you don’t want to create incentives for people not to have health insurance because there’s a whole variety of other reasons to have health insurance besides payment of a hospital bill: accessing health care appropriately for primary and preventive care, being able to access appropriate drugs and other medical equipment supplies. It’s a balance, and that’s where each community needs to look at what is the economic wherewithal within their community and what as an institution can they sustain in financial practices.

PB: Largely, it’s uninsured but sometimes people have access to some health insurance. For instance, auto insurance requires you to have a minimum level and emergency or trauma needs may go beyond that. So, the policies apply to both uninsured and underinsured. We recommend that hospitals establish a sliding scale of fixed fees. At 200 percent of the federal poverty level for a family of four, fees would be fully discounted. You’ve got to mix in whatever resources are available, because sometimes people are eligible for Medicaid, CHIP or adultBasic. You want a consistent standard to apply to each unique individual circumstance.

PB: Yes, and specifically to meet the provisions of Act 77, you have to make reasonable attempts to make sure whether they have access to other coverage or whether they have the financial wherewithal to pay their bill. That would generally be derived on some level and percent of the federal poverty level. There are individuals who are fairly well off, economically, who may be self-employed, and have the ability to pay the bill. You can’t claim that as charity care if you haven’t made reasonable attempts to ascertain their financial status. Once you’ve ascertained that they’re able to pay their bill, then you should bill them. The state of Pa. would expect that you would do that. They would not want you to avail yourself of state money for an individual who had the wherewithal to pay their bill.

PB: All patients, or their insurance companies, or the state or federal government, are billed at the same rate. Then, payment is variable. Payment by a Medicare patient is different than payment by a commercially insured. Payment by the state’s Medicaid program is very discounted. You bill for the service and then there’s a payment accepted. Rarely, if ever, do those without insurance and without financial aid eligibility pay full charges. For the people without health care coverage, for whom you totally determine there’s no auto insurance, workers comp, CHAMPUS, whatever – at that time most institutions will work out payment practices or acceptance of payment that is far below what is charged, for example, discounted payment if you pay cash or write a check. One of the problems is that that conversation doesn’t always happen in the best way or most appropriate time for the patient or their family members to understand.

PB: That is dependent upon the financial wherewithal of the individuals to pay, and has to be determined on a case-by-case basis within their institutions. An institution in a community that has a high unemployment rate and low income is very different than an institution in a suburban community, so the scope of what they may have to do and how they do it is very different. That’s why our guidelines address the need for hospitals to interact with other community agencies. You really have to understand your community and the community needs to understand the hospital’s ability to fulfill community health needs. There has to be a bit more open conversation.

There needs to be a written collection policy so that patients and their families see it. It can’t be something that’s secret that they didn’t know about. The collection policy should never force the sale or foreclosure of the patient’s home. You wouldntake away the patient’s residence to pay a bill. Often, the hospital will provide, either on the bill or on a separate sheet, information about re-ascertaining whether there are other sources of financial assistance available – special funds, other insurance programs, workers comp, auto – whatever might not have been considered. If you use a separate agency for collections, our guidelines say that the hospital should confirm in writing that that agency will abide by the hospital’s policies and mission. It is not charitable to have a collections policy that would have someone lose their home or get into such dire straits that it could become untenable.

PB: Emergency care being provided 24 hours a day, seven days a week across the Commonwealth is all well within policy. Care that is clearly outside of this policy would be elective plastic surgery. Where hospitals have to look within their ability to provide services is areas around elective procedures that fall somewhere below emergency but above totally discretionary. You’re going to see different organizations based on their mission, history and resources addressing a lot of those cases individually.

PB: I think the number is 41 hospitals in 21 states. There are three suits in Pa., although only one of those is part of the national lawsuits that have been instigated by Richard Scruggs: against the Thomas Jefferson Health System and the Albert Einstein Medical Center, which is part of that system. Similar lawsuits were filed by a local attorney in the Pittsburgh area against the University of Pittsburgh Medical Center and several of its hospitals, and also a suit against West Penn Allegheny Health System.

PB: The tax-exempt hospitals in Pa. since 1997 have met the Institutions of Purely Public Charity Care Act, which is pretty explicit in what it lays out. Here is a national effort that maybe didn’t take the time to see what already may have been required in state law and whether facilities were meeting those requirements or not. People in Pa. get emergency care. Their lack of insurance has not precluded their getting care. The volume of care we provide goes up and the amount of uncompensated care that we provide goes up, so we think the lawsuits are misdirected and without ground. PND: Scruggs also alleges that hospitals pursue "predatory and humiliating" collection techniques against the uninsured, endangering the financial stability of uninsured patients recovering from serious illness or injury.

PB: Our guidelines address fair and reasonable collection practices which we must have to be eligible for any compensation for uncompensated care. So, if you’re following the state laws, I think those lawsuits are groundless and baseless. Hospitals do not expect payment from those eligible for charity care or financial assistance of any kind to exceed those that they’re reasonably getting from other payors. If you were to call and ask individual hospitals, you would see that that’s the practice. And, since 70 percent of the hospitals in Pa. lose money on patient care, they’re obviously providing a lot more patient care than the insurers and individuals have the wherewithal to pay for.

PB: I don’t know how you do that and report it appropriately under state law. You have to follow generally accepted accounting principles. When you’re reporting to the Health Care Cost Containment Council, you have to follow their reporting requirements that define those issues very carefully in Pa. I don’t know how you engage in creative accounting without doing something fraudulent, or being discovered. Charity care is for individuals who have met the standards, such as an individual from a family of four at 200 percent poverty level who needed emergency admission, was treated, and you charged them nothing. Bad debt is when you have a reasonable expectation based on the financial information or the insurance information provided that there will be payment – there may be insurance which has copays or deductibles and you’ve made reasonable attempts to collect and it’s not paid. Those two numbers together – charity care and bad debt – equate to uncompensated care. You’d think it would be easy when an individual comes into a hospital to ascertain their insurance coverage, but it isn’t always the case. Families may involve divorce. With public programs like Medicaid, you could be covered one month and not covered the next month. And so it may be that you provide the care and ask about the financial information, and then the person wasn’t eligible for those programs but may eligible for charity care. Sometimes it does take a little bit of time and effort to sort out eligibility.

PB: It’s a struggle. Data from the Health Care Cost Containment Council 2003 report on hospital financial status indicated that more than 70 percent of Pa. hospitals lost money on patient care and 48 percent lost money overall. Our number of uninsured, particularly working adults, has grown quite dramatically over the last four or five years. The amount of uncompensated care that hospitals provide has, each and every year, grown to a larger amount. Each and every year over the last five years the number of hospitals in Pa. losing money has grown. And yet, annually in Pa., we still treat 1.8 million people inpatient, 33 million outpatient and five million emergency room visits. So, people in Pa. are getting needed care 24 hours a day, seven days a week. The ability to be an ongoing institution sustaining good quality of care, attracting quality physicians and providing the breadth of services that communities need is very strained by that financial circumstance.