As insurance plans continue to shift more of the financial burden of health care to patient, providers receive more requests for charity care or financial assistance. Health care services have become unaffordable for many, forcing some patients to avoid necessary treatment if they do not receive substantial financial discounts.
Does your ASC have a process in place to address the rise in patient co-pays and deductibles, and the growing need for charity care?
One option for dealing with patient payments is to waive co-pays or deductibles to avoid the process altogether. Such a tactic, however, could lead you straight into legal issues related to the False Claims Act, Anti-Kickback Statutes, and non-compliance with managed care agreements. Additionally, there are state specific laws addressing waiver of co-payments and deductibles. The best response is to develop sound financial hardship and charity care policies to help you legally and consistently navigate these waters.
What is the difference between charity care and financial hardship?
There are no formal definitions for charity care or financial hardship. Health care entities use a variety of terms including, but not limited to, uncompensated care, charity assistance, and bad debt. In Pinnacle III’s managed facilities, we have established distinct definitions to minimize confusion and enhance communication.
Charity care is free care. The patient simply has little to no means to pay for needed medical services. The benchmark for receiving charity care is typically set using family income between 100% and 400% of the Federal Poverty Level (FPL). A chart with percentages of the poverty guidelines listing yearly and monthly levels can be found online.[1]Â The U.S. Department of Health and Human Services releases U.S. Federal Poverty Guidelines which are updated every year using Census Bureau data. The current data can be found online.[2]Â If you choose to use this method, make sure you update your policy annually when the new guidelines are released.
Work with your Board of Directors to determine what poverty level you will use to grant a charity care service. You may want to consider a sliding scale as listed below; however, charity care is typically “free.”
An example of a sliding scale is:
Below 250% of FPL: 100% charity care
Between 251%-300% FPL: 75% discounted care
Between 301%-400% FPL: 60% discounted care
If you choose to implement a sliding scale, keep your procedure costs in mind. Set your lowest discounted rate at or slightly above Medicare reimbursement which should allow you to break even on the services being provided.
Some ASC’s establish a “Charity Care Day” for a set number of patients who have cleared the Center’s approval process. On this day the providers, staff, and even some vendors donate their time and/or resources for the charity care surgical cases. This practice demonstrates significant commitment to the Center’s community. Share with the local newspapers or launch a public relations effort to alert your community to your initiative to help those in need.
While charity care is “free,” financial hardship is a request for discounted care. Some of the other terms used to describe financial hardship are economic burden, economic hardship, financial burden, financial distress, and financial stress. Being under-insured, having no insurance, and increasing medical costs are situations that contribute to financial hardship. When reviewing a financial hardship request, it is essential to have patients substantiate their financial need. In some cases, patients with insurance who choose not to file their claim with the insurance company, may not be eligible for your financial hardship program. Ensure your board clearly defines your facility’s financial hardship parameters.
Creating a Policy
Both charity care and financial hardship requests should go through an application process. Assign a financial counselor, or someone in your facility who handles financial discussions with patients, to guide them through your process and move completed applications along for consideration and approval.
Consider the following when setting up your financial hardship and charity care policies:
- Create an application form for the current episode of care.
- Require a new application and proof of hardship for future care.
- Be precise about the documentation needed to support the request.
- Tax returns
- W-2s
- Bank statements
- Proof of unemployment
- Alimony, child support, etc.
- All sources of income
- Reject incomplete applications.
- Consider all financial resources available to the patient.
- Provide available options to patients upfront.
- Payment plans
- Low cost health care loans
- Establish timeline for review and approval.
- Determine notification process of approval or denial – letter or phone call?
- Maintain the confidentiality of the data received with the application. Ensure bank account details, social security numbers, etc. are redacted (or partially redacted) to prevent this information from falling into the wrong hands.
- Make the process known to your patients who apply and ensure staff consistently follow it.
- Educate your staff on policy guidelines, timeliness of the process, etc.
- Consistently apply the process to each individual patient to avoid claims of discrimination.
Once your policies are created, consult your attorney to ensure you have appropriately addressed any risks and you are following state laws.
Unforeseen circumstances arise at the worst times. Having sound policies to review financial hardship and charity care requests will help you compassionately work with your patients while protecting your ASC’s bottom line.
[1] US Department of Health & Human Services; Office of the Assistant Secretary for Planning and Evaluation, Resources, A chart with percentages (e.g. 125 percent) of the guidelines
[2] US Department of Health & Human Services; Office of the Assistant Secretary for Planning and Evaluation, Poverty Guidelines
Carol Ciluffo, VP of Revenue Cycle Management
