Hospitals Look to Health Law, Cutting Charity

By Abby Goodnough
May 25, 2014

Hospital systems around the country have started scaling back financial assistance for
lower- and middle-income people without health insurance, hoping to push them into
signing up for coverage through the new online marketplaces created under the
Affordable Care Act.

The trend is troubling to advocates for the uninsured, who say raising fees will inevitably
cause some to skip care rather than buy insurance that they consider unaffordable.
Though the number of hospitals tightening access to free or discounted care appears
limited so far, many say they are considering doing so, and experts predict that stricter
policies will become increasingly common.

Driving the new policies is the cost of charity care, which is partly covered by
government but remains a burden for many hospitals. The new law also reduces federal
aid to hospitals that treat large numbers of poor and uninsured people, creating an
additional pressure on some to restrict charity care.

In St. Louis, Barnes-Jewish Hospital has started charging co-payments to uninsured
patients, no matter how poor they are. The Southern New Hampshire Medical Center in
Nashua no longer provides free care for most uninsured patients who are above the
federal poverty line $11,670 for an individual. And in Burlington, Vt., Fletcher Allen
Health Care has reduced financial aid for uninsured patients who earn between twice
and four times the poverty level.

By tightening requirements for charity care, hospital executives say, they hope to
encourage eligible people to obtain low-cost insurance through the subsidized private
plans now available under the law.

Do we allow our charity care programs to kick in if people are unwilling to sign up?
said Nancy M. Schlichting, chief executive of the Henry Ford Health System in Detroit.
Our inclination is to say we will not, because it just seems that that defeats the purpose
of what the Affordable Care Act has put in place.

But advocates for the uninsured point out that many Americans avoided obtaining
coverage in the inaugural enrollment period of the Affordable Care Act this year because
they found the plans too expensive, even with subsidies. Many uninsured people also
remain unaware of the new insurance options, And immigrants who are in the country
illegally are not even eligible to apply.

Certainly we want to encourage people who have new access to affordable coverage to
take advantage of it, said Sidney D. Watson, a professor at St. Louis Universitys Center
for Health Law Studies. But I think were all going to have to do a lot to get that
message out, and there will always be people who wont have the option.

Beverly Jones, 51, of St. Louis, who has lupus, is the type of person targeted by Barnes-
Jewish Hospitals new policy. Ms. Jones, who already owes Barnes-Jewish thousands of
dollars for emergency room treatment and other visits, said the hospitals new co-
payments for the uninsured would throw my budget into a tailspin on her annual
income of $13,400, which comes mostly from disability checks.

She has enrolled in a subsidized insurance policy under the Affordable Care Act. But she
worries that she will have trouble paying the fees and deductibles required under her
new plan, even with generous subsidies.

Theres still a lot of stuff I cant afford to do, she said.

Many hospitals appear focused on reducing aid only for patients who earn between 200
percent and 400 percent of the poverty level, or between $23,340 and $46,680 for an
individual. Many of those people presumably have jobs and would qualify for subsidized
coverage under the new law.

BJC HealthCare, the nonprofit system that owns Barnes-Jewish and 11 other hospitals
in Missouri and Illinois, gives all uninsured patients a 25 percent discount on the billed
charges, regardless of their income. But the system previously provided additional
discounts to uninsured patients with incomes up to 400 percent of the federal poverty
level. Now, only patients earning up to 300 percent of the poverty level, or $35,010 for
an individual, are eligible.

And for the first time, everyone who gets financial assistance owes at least a small co-
payment. For example, patients with incomes at or below the poverty level are now
charged $100 for emergency care and $50 for an office visit.

We didnt want to have a policy that would encourage people not to follow the
mandate to get health insurance, said June Fowler, a spokeswoman.

In the past, Southern New Hampshire Medical Center generally provided free or
discounted care for patients who were at or below 225 percent of the poverty level, or
about $26,260 for an individual. But starting this year, only patients below the poverty
level will receive such charity care, said Paul Trainor, the systems vice president of
finance.

Patients who refuse to purchase federally mandated health insurance when they are
eligible to do so will not be awarded charitable care, the hospitals revised policy states.

Fletcher Allen, Vermonts largest health care system, changed its policy on April 1,
requiring many uninsured patients to pay a percentage of their bill instead of a fixed fee
of up to $1,000. Patients earning 200 percent of the poverty level or less will not be
affected by the change, said Shannon Lonergan, Fletcher Allens director of registration
and customer service. But those earning between 201 percent and 400 percent of the
poverty level will now have to pay between 15 percent and 45 percent of their bill,
depending on their income.

Ms. Lonergan said the new policy would affect only about a third of its financial aid
recipients. At BJC HealthCare, only about 3 percent of charity care patients in 2012
earned more than 300 percent of the poverty level and thus would no longer qualify for
financial assistance unless there were extenuating circumstances, Ms. Fowler said.

Officials at both Fletcher Allen and BJC HealthCare said they had worked hard to
inform patients about new insurance options during the recent enrollment period and to
help them enroll in coverage. Both systems provide financial aid to lower-income people
with high insurance costs.

The financial challenges are particularly daunting in the more than 24 states that have
not yet expanded Medicaid, including Missouri. The Affordable Care Act reduces federal
aid for uncompensated care on the assumption that hospitals would replace much of the
lost income with payments for patients newly covered by Medicaid.

But the Supreme Court in 2012 gave states the right to opt out of the expansion. Now
hospitals that treat the poor and uninsured in states like Missouri are losing federal aid
without getting new Medicaid payments, a problem they say is threatening their bottom
lines. Robert Hughes, the president and chief executive of the Missouri Foundation for
Health, an independent philanthropic group, said BJC HealthCare was in a tough spot
because of the states refusal to expand Medicaid.