It has recently come to the attention of The Coalition for Affordable Hospitals (Coalition) that NewYork-Presbyterian Hospital’s (NYP) “Financial Assistance Policy” (FAP) fails to include an “indigency policy” as promulgated by the Centers for Medicare & Medicaid Services (CMS). The intent of an indigency policy is to protect obligors of limited means from being forced into medical indigency by a hospital organization’s charges. An obligor is the party responsible for the patient’s medical expenses, e.g., the custodial parent of a child.
A component of an indigency policy is the determination of the amount an obligor can afford to pay, financial ability-to-pay the hospital organization’s charges and not be forced into medical indigency. An issue within the determination, decisioning, of the amount an obligor can afford is who and how the decisioning is accomplished – procedures and practices. There are conflicts of interest with NYP doing the “Financial Assistance Eligibility Screening” (FAES).
To eliminate the conflicts of interest and protect taxpayers, citizens, obligors, employers, and insurers NYP should outsource the FAES to an independent third-party credit expert, an organization with demonstrated competence in the application of today’s credit management technology to objectively, reproducibly and transparently determine the amount if any an obligor can afford – financial ability-to-pay and not be forced into medical indigency.
In 2004, Secretary Tommy Thompson, Department of Health and Human Services (HHS), responded to the American Hospital Association (AHA):
Hospitals’ charging the uninsured the highest rates is a serious issue that demands all of our attention. …
HHS regulations require hospitals to bill all patients using the same schedule of charges and suggests that as a result, the uninsured are forced to pay “full price” for their care. That suggestion is not correct and certainly does not accurately reflect my policy. The advice you have been given regarding this issue is not consistent with my understanding of Medicare’s billing rules.
To be sure that there will be no further confusion on this matter, at my direction, the Centers for Medicare & Medicaid Services and the Office of Inspector General have prepared summaries of our policy that hospitals can use to assist the uninsured and underinsured. This guidance shows that hospitals can provide discounts to uninsured and underinsured patients who cannot afford their hospital bills and to Medicare beneficiaries who cannot afford their Medicare cost-sharing obligations. Nothing in the Medicare program rules or regulations prohibit such discounts. In addition, the Office of Inspector General informs me that hospitals have the ability to offer discounts to uninsured and underinsured individuals and cost-sharing waivers to financially needy Medicare beneficiaries.
With this guidance as a tool, we strongly encourage work with AHA member hospitals to take action to assist the uninsured and underinsured and therefore, end the situation where, as you said in your own words, “uninsured Americans and others of limited means are often billed and required to pay higher charges.”
Centers for Medicare & Medicaid Services’ Summary
Q1: Can a hospital waive collection of charges to an indigent, uninsured individual?
A1: Yes. Nothing in the Centers for Medicare & Medicaid Services’ (CMS’) regulations, Provider Reimbursement Manual, or Program Instructions prohibit a hospital from waiving collection of charges to any patients, Medicare or non-Medicare, including low-income, uninsured, or medically indigent individuals, if it is done as part of the hospital’s indigency policy. By “indigency policy,” we mean a policy developed and utilized by a hospital to determine patients’ financial ability to pay for services. By “medically indigent,” we mean patients whose health insurance coverage, if any, does not provide full coverage for all of their medical expenses and that their medical expenses, in relationship to their income, would make them indigent if they were forced to pay full charges for their medical expenses.
In addition to CMS’ policy, the Office of Inspector General (OIG) advises that nothing in that agency’s rules or regulations under the Federal anti-kickback statute prohibits hospitals from waiving collection of charges to uninsured patients of limited means, so long as the waiver is not linked in any manner to the generation of business payable by a Federal health care program – a highly unlikely circumstance.
Internal Revenue Code § 501(r)
Internal Revenue Code (IRC) § 501(r) requires hospital organizations have a financial assistance policy, limits charges and notify obligors of the financial assistance to which they are entitled.
Financial Assistance Policy:
A financial assistance policy that includes an indigency policy.
Limits Charges:
The Internal Revenue Service’s (IRS) technical explanation for IRC § 501(r)(5) provides eligible uninsured obligors be billed using either the best, or an average of the three best, negotiated commercial rates, or Medicare rates. It prohibits using gross charges (i.e., “chargemaster” rates).
IRS Technical Explanation for IRC § 501(r)(5)
Each hospital facility is permitted to bill for emergency or other medically necessary care provided to individuals who qualify for financial assistance under the facility’s financial assistance policy no more than the amounts generally billed to individuals who have insurance covering such care. A hospital facility may not use gross charges (i.e., “chargemaster” rates) when billing individuals who qualify for financial assistance. It is intended that amounts billed to those who qualify for financial assistance may be based on either the best, or an average of the three best, negotiated commercial rates, or Medicare rates.
Notify Obligors of The Financial Assistance to Which They Are Entitled:
If NYP were in fact following the spirit and intent of CMS’ policy and IRC § 501(r), acting altruistically, uninsured and underinsured obligors of limited means, as determined by the FAES, would be informed at admission of their obligation if any to your organization. The issue is NYP’s “Financial AssistancePolicies and Procedures” continue to force uninsured and underinsured obligors of limited means into medical indigency.
The Coalition understands the decisioning of an obligor’s FATP your organization’s charges and not be forced into medical indigency can be accomplished in seconds at admission. To eliminate conflicts of interest and protect taxpayers, citizens, obligors, employers, and insurers the Coalition is in agreement the decisioning should be accomplished by an independent third-party credit expert using today’s credit management technology to achieve objective, reproducible, and transparent decisions (procedures and practices). The Coalition understands the technology to accomplish the decisioning is common and has been deployed and utilized by lenders for decades, and a specific decisioning algorithm can be implemented at an individual hospital, county, or state level.
The outcome of the omission of an indigency policy, failing to comply with CMS’ policy, and failing to follow the prescribed accounting practices in IRC § 501(r), connotes an indifference to impoverishing vulnerable and defenseless uninsured and underinsured obligors of limited means, your reimbursement rates are increased as a result of your overstating “uncompensated care expense” which in turn increases insurance premiums – a vicious cycle for taxpayers, citizens, obligors, employers, and insurers.
Referencing Secretary Thompson: “Hospitals’ charging the uninsured the highest rates is a serious issue that demands all of our attention.”
Note: Barak Richman, a law professor at Duke University School of Law, opined:
“The problem of surprise bills from the chargemaster is even more pernicious. It’s almost akin to stealing, stealing for the purpose of obtaining leverage for subsequent negotiations.”
NYP and all other New York City hospital organizations are failing to fulfill their charitable purposes, and their conduct will likely force 60-70% or more of our friends, neighbors, and family members into medical indigency over the span of their lifetimes. The facts are irrefutable: “nearly 70% of individuals filing for personal bankruptcy cite medical debt as the reason.” How many obligors just endure? How many individuals of limited means do not seek care as a result of your failing to implement an indigency policy? It bears asking again: How many individuals of limited means do not seek care as a result of your failing to implement an indigency policy?
NYP is clearly failing to provide the charitable patient care, community benefits and serve the interests of taxpayers, citizens, obligors, employers, and insurers required to maintain its special tax status.
The Coalition has a right, indeed, an obligation to expect better from New York City’s hospital organizations.