The Nuts & Bolts of Hospital Charity Care Rules

August 13, 2009

Author: Trilby de Jung

Overview 

Charity care refers to free or low cost care provided by hospitals to uninsured or underinsured patients.   New York State has provided significant state funding to hospitals for charity care since 1983, but it wasn't until 2007 that hospitals were actually required to provide charity care to uninsured patients under the Hospital Financial Assistance Law (HFAL).  HFAL, codified at §2807-k(9-a) of the New York Public Health Law, provides advocates with a powerful new tool in advocating for uninsured clients facing hospital bills or in need of medical care from hospitals.

HFAL establishes a sliding fee scale rate for all uninsured patients living at or below 300% of the federal poverty line (FPL).  All hospitals in New York must have financial assistance programs, with policies for determining eligibility for
discounted care on file with the New York State Department of Health (NYSDOH).  In addition HFAL limits collection practices for hospitals.  For example, HFAL prohibits hospitals from issuing bills or collection notices while an application for financial assistance is pending. 

Unfortunately, there is no parallel law applicable to health care providers who are not hospitals or directly employed by hospitals.  Thus, patients who are billed by physicians practicing at hospitals but not employed by the hospital do not have the protection created by HFAL regarding limits on charges and collection practices, or the right to apply for financial assistance.

Each hospital's financial assistance program is different, so you should be sure to obtain a copy of the policy from your client's hospital.  Certain key elements are required in all hospital financial assistance programs, as laid out below.

Eligibility for Hospital Financial Assistance

Income Levels

Hospitals are required to provide financial assistance by reducing charges on a sliding scale basis for services to patients with income below 300% of the FPL.  Patients have to apply for the discount, and the level of discount depends on income.  Hospitals must provide qualified patients with proportional discounts within the levels in the table below. 

Nominal rates for the major service categories were specified by NYSDOH in an attachment to a May 2009 Dear Hospital CEO Letter, which is attached to this article.  The nominal rates are as follows:

Hospitals must make installment plans available to patients who are unable to pay the reduced rates all at one time.  Interest levels are limited and cannot be increased based on missed payments.  Monthly payments cannot exceed 10% of the patient's gross monthly income.  Although hospitals can charge a deposit up front on reduced rates, deposits cannot be "an undue obstacle" to accessing services.

Resource Levels

HFAL allows hospitals to take resources into account on a case by case basis and reduce discounts for patients with significant assets, but only for patients with income below 150% of the FPL, and only with prior approval from NYSDOH.  In order to obtain prior approval, hospitals must file their asset policy with NYSDOH and must certify the following:

1.  The following assets must be exempt from consideration --

• a patient, or legally responsible relative's primary residence
• tax deferred retirement savings accounts
• college savings accounts
• cars regularly used by the patient or immediate family members

2.  Only patients with income at or below 150% of the FPL can be subjected to scrutiny for assets.

3.   Assets below levels specified by NYSDOH cannot be considered.  The most recent year for which NYSDOH as specified asset levels is 2007.  Those levels are as follows:

 

Household Size	Asset Level
one	$4,200
two	$5,400
three	$6,600
four	$6,650
five	$6,700
six	$6,800
seven	$7,650
eight	$8,500
each additional person	$850

Insurance Status

HFAL covers uninsured patients.  Patients with insurance are covered only if they have exhausted their insurance benefits.  Hospitals are encouraged, but not required, to provide financial assistance to patients who are insured but unable to meet co-payments or deductibles.

Immigration Status

Hospitals must make financial assistance available to qualified patients, regardless of immigration status. 

Residence

Hospitals must make financial assistance for emergency services to qualified patients who reside in New York State.  Hospitals are allowed to limit financial assistance for all other necessary medical services, such as out-patient services or elective surgery, to patients who reside within their primary service area (PSA).  Hospitals cannot limit financial assistance based on the medical condition of the patient, unless clinical considerations would dictate limits on actual medical services.

NYSDOH has developed criteria for determining a hospital's PSA, and has made initial assignments with input from hospitals, consumer advocates, and local public health officials.  Hospitals must notify the Commissioner of Health of any changes to its PSA, and hospitals cannot alter their PSAs in order to avoid medically underserved or uninsured communities.  Every county in New York State is included in at least one general hospital's PSA.  You can hospitals that provide financial assistance for non-emergency care to your county by using the hospital search tool on the NYSDOH website.

Medicaid Denials

Hospitals cannot require applicants to apply for and be denied benefits from Medicaid or any other public insurance program as a condition of applying for financial assistance.  However, hospitals that have a reasonable basis for believing that an applicant may be eligible for Medicaid or other public insurance may require the patient to cooperate in applying for such coverage as a condition of applying for financial assistance.  NYSDOH has told hospitals to process financial assistance applications concurrently with any application for public funds.  See, May, 2009 Dear Hospital CEO Letter.

The Application Process

Hospitals must give patients a minimum of 90 days from the date they receive services to ask for financial assistance.  In addition, patients must have at least 20 days from receipt of an application to submit the complete form, for a total minimum time to submit a complete application of 110 days.  Decision must then issue within 30 days.  All hospitals must develop policies for appealing denials of financial assistance.

Hospitals are allowed to require documentation of income and residence from patients who apply for financial assistance.  However, HFAL prohibits use of "overly burdensome and complex" applications.  NYSDOH set out the requirements for financial assistance applications in its May, 2009 Dear Hospital CEO Letter.  These requirements include:

1. Applications must clearly indicate the time frames for submitting applications. 
2. Documentation of income must be limited to current income.  Hospitals may not require copies of tax returns or other past IRS documentation.  
3. Information regarding monthly bills is not relevant. 
4. Hospitals may require documentation of residence.
5. Information regarding immigration status is not relevant.
6. Application materials must explain that patients can disregard bills while an application for financial assistance is pending.  Hospitals may not forward accounts to collection while an application is pending.
7. When an application is denied, hospitals must provide such notice in writing and provide information about the appeals  process in the denial.

Notification Requirements for Hospitals

Hospitals are required to notify patients that financial assistance may be available to help them pay for services.  HFAL is very specific regarding notification requirements, which were communicated to all hospitals in a February 2007 Dear Hospital CEO Letter issued by NYSDOH.  These requirements include:

1. A summary of the hospital's financial assistance policy must be provided upon request.  The summary must include:  income levels for eligibility; a description of the hospital's primary service area, and; the process for applying for financial assistance.
2. Hospitals with 24 hour emergency departments must have conspicuous postings of language appropriate information about how to access financial assistance in waiting rooms, outpatient clinics, and billing and Medicaid offices.
3. Information about financial assistance must also accompany all billing statements sent to patients by either the hospital or its contracted collection agency. 

Limits on Collection Practices

HFAL creates the following new limits on hospital collection practices:

1. Hospitals cannot commence collections against any patient who was eligible for Medicaid at the time services were provided.
2. Hospitals must require any contracted collections agencies to comply with the hospital's financial assistance policy. 
3. Contracted collection agencies must provide information to patients on how to apply for financial assistance.
4. Hospitals may not send an account to collection if an application for financial assistance is pending.
5. Patients must receive notification that an account will be referred to collections at least 30 days prior to referral.
6. Contracted collections agencies must     obtain the hospital's written consent before commencing a legal action.
7. Hospitals may not force the sale or foreclosure of a patient's primary residence to   collect on an outstanding bill.

The hospital's financial assistance policy should include information about collection practices but NYSDOH has noted that hospitals routinely failed to include this information in policies initially submitted to the Department. 

We encourage advocates to ask hospitals to allow any low-income patient dealing with hospital bills that they are unable to pay to apply for financial assistance.  Often times, violations of the above requirements under HFAL will help persuade a hospital to extend the timeline for a financial assistance application, or even to extend financial assistance beyond the minimum required under HFAL.

Enforcement of HFAL

Complaints about a hospital's financial aid program should be made to the Department's Centralized Complaint hotline at 800-804-5447.  HFAL authorizes NYSDOH to impose civil penalties of up to $10,000 for each failure to comply with the provisions of the financial assistance law.  However, state resources for monitoring and enforcing HFAL are limited. 

Advocates encountering problems accessing financial assistance for clients are encouraged to call the Centralized Complaint hotline (# above) in order to create an immediate record with NYSDOH.  Those who wish to assist consumer
advocates in compiling a log of cases are also encouraged to use the HFAL case write-up form developed by the Urban Justice Center’s Community Development Project.  We hope to use the log to us help track trends and systemic issues statewide.  The write-up form is available as an attachment to this article.  For information about where to submit completed forms, contact Trilby de Jung at the Empire Justice Center (tdejung@empirejustice.org).