Revenue Cycle Management Source: The Academy of Healthcare Revenue
Examining Your Organization's Charity Care Policies
Although healthcare providers’ charity care practices may
not have received as much focus from media and legislative
leaders in the past year compared to the attention this issue
received three years ago, many providers have continued to
assess their charity care policies. The ongoing growth in the
uninsured population has contributed to a healthcare environment
in which leaders must re-evaluate the needs of their
patient population, as well as patients’ ability to pay their
financial responsibilities. In addition to the increasing self-pay
financial class at many providers, more and more insured
patients are seeing an increase in their out-of-pocket obligations.
For example, some patients with high-deductible
health plans may be required to pay up to $10,000 before
their insurance plan begins covering their healthcare costs.
These patients may be as unlikely to pay their high-dollar balances
as pure self-pay patients.
Revenue cycle leaders are also finding a need to re-evaluate
charity care policies in the face of changing federal and
state government assistance program regulations. As a case
in point, the current impasse in Congress, attempting to reauthorize
the State Children’s Health Insurance Program, may
force a number of states to begin removing enrolled children
from public assistance rolls in order to address program
funding shortages. Lesley Cummings, the executive director
of California’s child health program, said, “Given continued
uncertainty, we will have to start dropping children from
the program—64,000 a month, starting in January—to save
money. This is getting less hypothetical.”1
Providence Health & Services, a seven-hospital system in
Oregon, has implemented a series of policies designed to bolster
patient awareness of financial assistance options and
increase the percentage of uncompensated care that is ultimately
written off as charity care rather than bad debt. Oregon,
like many other states, has seen a sharp increase in
the number of uninsured, rising to 17 percent of total residents
in the state, slightly above the national average.
Kristi Gwilliam, Manager of Financial Assistance Programs
at Providence, explained, “Each year our uninsured revenues
have increased dramatically. In just the past two years, it’s
increased by about 34 percent.”
As the self-pay class has grown markedly in recent years,
healthcare providers throughout Oregon, as well as the U.S.,
are frequently increasing the amount of charity care they provide,
and revamping policies in order to more effectively inform patients of their financial assistance options. As the previous
graph shows, providers in the state of Oregon have significantly
increased the amount of charity care they provide, which
is now more than their total bad debt write-offs.
Providence has a standard self-pay discount policy in place.
Patients who are identified as uninsured are automatically
given a discount off their gross charges, even if the patient has
not applied for financial assistance. Discounts are adjusted
annually and are nearly equivalent to Providence’s largest
managed care contracted discount. Discounts are generally
between 13 and 28 percent, depending on the location of each
facility and its payer discounts.
In addition to the standard self-pay discounts, Providence
grants full charity care to patients with incomes below 200
percent of the federal poverty guidelines (FPGs). Furthermore,
Providence will grant patients partial charity care on a sliding
scale up to 400 percent of the FPGs. Gwilliam also noted
that Providence’s charity care policy is regarded as a baseline
for considering the charity care needs of individual patients.
“The sliding fee scale is the guideline; there are patients who,
based on their life situation, will be approved higher discount
amounts.”
Key to Providence’s charity care processes is its patient outreach
efforts. Providence’s financial assistance policies are
prominently displayed on the organization’s website, where
patients can access and print financial assistance applications.
Signage is also prominently displayed in each patient access
or registration point. Uninsured patients are given a business
card, informing them of the financial assistance program, when
registering in person. Gwilliam added that patients can call an
information hotline as well. “We also have a 24-hour voicemail
that’s available for our patients, so if they call into our regional
call center, even after hours, to inquire about financial assistance,
they can leave their name and number and we’ll mail
them an application the next day. They have a lot of access,
and we do a lot of education, even internally with our own staff,
just to make sure everybody is fully aware of where the patient
can go if they have questions about financial assistance,” Gwilliam
said. “Every monthly statement contains a notice about
how to apply for financial assistance.”
Providence’s efforts to raise patients’ awareness of their
financial options has paid off. Charity care as a percentage of
gross revenue increased from 3.3 percent in 2004 to 4.3 percent
in 2007. More importantly, the distribution of uncompensated
care write-offs between bad debt and charity care as a percentage
of gross revenue was 21.5 percent and 78.5 percent respectively, placing Providence in
the top 10 percent of hospitals nationwide.
Ultimately, it is essential for healthcare providers to routinely
assess the charity needs of their patient populations,
and adjust their charity care policies to meet those needs. Furthermore,
charity care policies must be effectively communicated
to patients in order for patients to take advantage of
their financial assistance options. Gwilliam explained Providence’s
philosophy stating, “We want to make sure we’ve
given that patient every opportunity to resolve their balances
with us internally.” Ensuring that patients are informed and
reminded of their assistance options throughout their entire
episode of care can go a long way in making sure that patients
are given every opportunity to seek the financial assistance
they may need.
1 Robert Pear, “Federal Study Offers Dire Outlook on Child Insurance,”
New York Times, 31 October 2007.
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Media Contact Andrea Morrill
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