The Affordable Care Act mandated that to retain their nonprofit status, hospitals must limit the cost of medically necessary care for patients who are eligible for financial assistance and determine a patient’s assistance eligibility early on. Kaiser Health News reported in April 2019, charity care spending in California had dropped dramatically. Hospitals claim that fewer patients are uninsured now. But the reality is, even though more patients have insurance than in the past, insured patients face unaffordable out-of-pocket costs. Bottom line, the need for charity care still exists, but the nature of that need has changed. — The HEAL Team
Hospital Known For Glamorous Patients Opens New Doors To Its Neediest
Previously, the nonprofit hospital’s financial assistance policy allowed patients with household incomes up to 200% of the federal poverty level to qualify for free care, which amounts to $24,980 for an individual or $51,500 for a family of four, based on 2019 figures.
Cedars-Sinai has spent a much smaller percentage of its operating expenses on charity care: 0.19% in 2018 compared with an average of 0.9% by other California nonprofit hospitals, data from the Office of Statewide Health Planning and Development shows.
The hospital is now making its charity care policy the most generous of the state’s 10 largest nonprofit hospitals, ranked by net patient revenue from the 2017-18 fiscal year, according to a California Healthline analysis. It will expand eligibility for free medical care to patients with household incomes up to 400% of the federal poverty level: $49,960 for an individual and $103,000 for a family of four. It will also expand access to discounted care to those with incomes up to 600% of the federal poverty level.
The hospital said it is making the change because it is treating more patients who are “underinsured” because they have health insurance plans with high deductibles, copayments or other out-of-pocket costs.
“More of our patients are having financial difficulties, so we want to help them,” Cedars-Sinai said in an emailed statement. It declined to attribute its response to a specific person.
The hospital defended its low charity care percentages, saying the figures don’t account for its other charitable grants and programs, or the large number of low-income patients it serves who have publicly funded health coverage. It pointed out that it spent 16.5% of its total expenses in fiscal year 2018 on such programs and expenses.
Cedars-Sinai Medical Center is the third-largest nonprofit hospital in California, after Stanford Hospital and the University of California-San Francisco Medical Center. It had $3.15 billion in operating expenses in 2018, according to state data.
Nonprofit hospitals are exempt from paying local, state and federal taxes in exchange for providing community benefits, which can include free and discounted charity care, as well as programs like grants for homeless services and free community clinics.
The federal government does not specify an amount of charity care that nonprofit hospitals must provide, which means that policies vary from hospital to hospital, as does the amount of free care they ultimately give.
For instance, of the 10 largest nonprofit hospitals in the state, the University of California-San Diego Medical Center provided the highest share of charity care in 2018 — 5.2% of operating expenses — which is more than five times the state average for nonprofit hospitals, according to state data. However, it also has relatively low income levels for qualifying: 200% of the federal poverty level for free care and 400% for discounted care.
Kaiser Permanente, which operates 36 hospitals in California, has not been required to report facility-level financial data to the state, so its hospitals were not part of the analysis. Kaiser Permanente allows patients with income up to 350% of the federal poverty level to apply for financial aid. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)
Hospitals must post their financial assistance policies online, and inform patients how to apply by posting notices and providing written notice to uninsured patients when they are admitted and billed. But not all hospitals do this, and some actively discourage people seeking financial assistance.
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Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.
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