COUNTING CHARITY CARE: One in a series on how hospitals provide care to the uninsured
Pennsylvania hospitals lag other states in share of charity care for the poor
July 31, 2016 12:00 AM
Of the state’s 170 hospitals in 2014, Pennsylvania Hospital in Philadelphia, above, and 106 others, or 63 percent of them, provided charity care equal to less than 1 percent of their net patient revenue, according to an analysis of data from the Pennsylvania Health Care Cost Containment Council.
Patient Tom Dugan and clinical care manager Helen Meyer discuss charity care at the Catholic Charities Free Health Care Center, Downtown.
Clinical care manager Helen Meyer, of the Catholic Charities Free Health Care Center, Downtown, says finding out how difficult it was for patients to get charity care “was a huge revelation” to her.
Patient Tom Dugan talks about charity care at the Catholic Charities Free Health Care Center, Downtown.
On the outside of Pennsylvania Hospital in Philadelphia reads a slogan: "Take Care Of Him And I Will Repay Thee."
On the outside of Pennsylvania Hospital in Philadelphia reads a slogan: "Take Care Of Him And I Will Repay Thee."
By Sean D. Hamill / Pittsburgh Post-Gazette
Pennsylvania Hospital, the country’s first hospital, was founded by Ben Franklin and others in Philadelphia in 1751 “to care for the sick-poor and insane.” It adopted as its official seal the Good Samaritan and the motto “Take care of him and I will repay thee.”
But today, Pennsylvania Hospital, like most of the state’s hospitals, provides little free charity care to the poor, compared to other states, according to an investigation by the Post-Gazette using state data never previously made public.
View a map and the raw data
This interactive map shows some of the data discussed in this story for every hospital in the state, searchable by click on your hospital's location
This searchable data set shows the raw data for every hospital in Pennsylvania that reported charity care, bad debt and other data to the state from 2004 to 2014.
Of the state’s 170 hospitals in 2014, Pennsylvania Hospital and 106 others, or 63 percent of them, provided charity care equal to less than 1 percent of their net patient revenue, according to an analysis of data from the Pennsylvania Health Care Cost Containment Council.
That same data shows that Pennsylvania Hospital, still operating out of its stately, original red brick and marble main building not far from some of the poorest neighborhoods near Center City in Philadelphia, is part of an even more troublesome category: It is one of 39 hospitals in the state — 23 percent of them — that provided less than one-quarter of 1 percent in charity care, and 10 of those said they provided no charity care at all.
The hospital, owned by the University of Pennsylvania since 1997, told the state it provided only $1.1 million worth of charity care in 2014 out of its $477 million in revenue that year. For the last decade, Pennsylvania Hospital has never provided more than 0.37 percent in charity care.
Few hospitals do significantly better: Only 13 hospitals in the state — just 7 percent — provided more than 3 percent in charity care. Patient advocates believe many of the highest charity care figures may be inflated thanks to a new financial tool known as “presumptive eligibility” that some hospitals began using as early as 2008. Advocates maintain this does not count as charity care because an individual may not be told he has qualified. Hospitals, however, believe the tool helps them accurately count the care they provide to the poor.
Of the 170 hospitals that reported data to PHC4 in 2014, the average amount of charity care was just 1.19 percent.
The amount of charity care hospitals provide can vary widely and can be affected by many factors including a hospital’s own charity care policies, the makeup of the surrounding neighborhoods and towns, whether there are alternatives to accessible health care and state regulations.
Pennsylvania’s low overall average surprised experts because it is one of the few large U.S. states that does not have any publicly funded general acute-care hospitals that would provide the uninsured with much of the care. Without them, hospital-level care for the poor falls on private hospitals in Pennsylvania.
Few states have a state agency like PHC4 that has collected charity-care data every year since 1995. But for the past four years, the federal Centers for Medicare and Medicaid, as part of the Affordable Care Act, has been requiring hospitals to report charity care in a way similar to PHC4.
CMS’s data shows that Pennsylvania hospitals annually provide among the least amount of charity care of any state in the country, among the lowest nine states by percentage in all four years.
In addition, Pennsylvania’s percentage was about one-third the national average each of the four years CMS has collected the data. (For this analysis of federal data, the Post-Gazette used data for only hospitals that submitted information all four years that CMS has collected the data.)
Pennsylvania’s 0.65 percent average in 2014 — using federal data — as well as the prior three years, was also much lower than all of its neighboring states. In 2014, Maryland had the second highest percentage in the country with an average percentage of 2.85, but New York (2.03 percent) was also much higher, as were New Jersey (1.84 percent), Ohio (1.13 percent), West Virginia (1.10 percent) and Delaware (0.79 percent).
The charity-care showing looks even worse when measured against uninsured rates: Of Pennsylvania’s neighboring states, only New Jersey (at 11 percent) had a higher percentage of uninsured than Pennsylvania (with 8 percent uninsured) in 2014, according to the Kaiser Family Foundation. Even though Maryland (6 percent), New York (8 percent), Ohio (7 percent), West Virginia (6 percent) and Delaware (7 percent), had the same or lower percentages of uninsured than Pennsylvania, they still provided more in charity care.
In its investigation, the Post-Gazette used state data requested under the state’s Right-to-Know law, reviewed thousands of pages of documents in court files and interviewed more than 100 government and hospital officials, medical and financial industry officers, patient advocates, social services agency representatives, and patients. The investigation found:
• Large disparities in the way that charity care is provided at hospitals across the state, with some wealthy hospitals providing little charity care, while struggling hospitals close by provide much more;
• A growing number of for-profit hospitals in the state providing far less charity care than their nonprofit predecessors, as well as other nonprofit competitors, putting even more pressure on nonprofits near them to provide such care;
• Use by many of the state’s hospitals of a new, credit-score-like system of qualifying people for charity care called “presumptive eligibility” that patient advocates say raises questions about how some hospitals are now counting and reporting their charity care.
Less charity care?
These discoveries by the Post-Gazette come as hospitals nationally were hoping to have to provide less charity care — sometimes called financial assistance or indigent care — to the poor, and have less bad debt.
A big part of the federal Affordable Care Act’s implementation was designed to help hospitals reduce their spending on charity care, as well as bad debt, which are unpaid bills not eligible for charity care. They hoped to do this by reducing the number of people without insurance, freeing revenue to help them operate. The Post-Gazette found there is evidence that this already is occurring.
But experts say for a variety of reasons, it probably always will be necessary for hospitals to provide charity care, even with fewer uninsured.
“We’re down to about 29 million uninsured [from 44 million]. But I think there’s kind of a sense that we might have topped out at this point,” said Peter Cunningham, a professor of health behavior and policy at Virginia Commonwealth University and an expert on access to care. “The group of uninsured that is left are resisting all efforts to get them enrolled [in expanded Medicaid or insurance]. Because of that and other issues, we’re still going to need hospital charity care.”
PG graphic: How does PA compare? (Click image for larger version)
Why do Pennsylvania hospitals provide among the lowest amount of charity care in the country?
One reason may be the now-20-year-old state law known as the Purely Public Charities Act, or Act 55. The Legislature passed it in 1997 with a definition of how much in “community services” the state’s charities — including hospitals — should provide to qualify for tax-exempt status, including property taxes.
The law — which was superseded in 2012 by a Pennsylvania Supreme Court ruling — allowed charities to meet the community services requirement by meeting any one of seven options, none of which specifically mention hospital charity care. The 1997 law is still in effect, but hospitals and other charities must first pass the court’s test before qualifying as a charity.
The state’s low ranking in providing charity care compared to other states “is proof, if ever we needed it, that the [Pennsylvania Legislature’s] definition of a purely public charity is not working,” said Nicholas Cafardi, a Duquesne University law professor and expert on tax-exempt organizations.
Another reason is that the state has become a welcome home to for-profit corporations that have bought formerly nonprofit hospitals. Even though some of the for-profit corporations regularly promise to provide the same “level” of charity care as their nonprofit predecessors, state data show that most of them do not provide the same amount as the nonprofit owners did.
In addition, in 1996, the state Legislature let lapse the law that required state approval — a “certificate of need” — before a new hospital could be opened. The result has been 10 new, for-profit surgical hospitals around the state that do primarily lucrative surgeries but don’t have emergency rooms and provide almost no charity care.
Only one of the 34 for-profit hospitals in the state — both community hospitals and surgical hospitals — existed before 1996. But they now represent 20 percent of all hospitals in the state and their numbers continue to grow annually.
Another part of the reason Pennsylvania hospitals say they classify so little care as charity is something best summed up by Courtney Coffman, chief financial officer for Lower Bucks Hospital in Bristol north of Philadelphia: “You have to look at bad debt and charity care in aggregate, because you’re not getting reimbursed either way.”
Ms. Coffman works for a for-profit hospital system, after Prime Healthcare bought Lower Bucks from the former nonprofit board in 2012. But many Pennsylvania nonprofits see it the same way she does.
“There should have been a column for just plain old uncompensated care. Because it takes a lot of time and effort to figure out if someone really can’t pay their bill” and deserves charity care, said Ohio Valley Hospital CEO David Scott.
To the hospitals, whether a patient ends up getting charity care, or is classified as bad debt is not an important distinction, even though which category you end up in has a very different impact on the patient.
It’s not that hospitals don’t want to provide the uninsured with care, said Ms. Coffman. After all, most charity care comes in through the emergency room, where hospitals are obligated to provide the person with at least a checkup, regardless of ability to pay.
“Sometimes people don’t fill out the charity-care applications,” she said. “We’d love to get these people into a charity-care plan, but they won’t fill out the form. If the application is not completed, it does not get classified as charity care.”
Patient advocates maintain that this focus on filling out forms and gathering documents is one passive way that hospitals can discourage providing more charity care. If they don’t award it because of a technicality, patients won’t return for more care because they think they owe money, and the hospital can continue to try to collect payment from them.
Hospitals very well may not see any difference between bad debt and charity care on their balance sheets, said Ms. Curtis.
“Yes, bad debt and charity care are two sides of the same accounting ledger — unless you’re the patient,” she said.
The reason is obvious to anyone who has owed money they could not pay back.
“You’re dealing with folks already dealing with lots of stress,” said Philip Gonzalez, program director for Community Catalyst’s Hospital Accountability Project. “Having another bill hanging over their heads while they’re trying to get health care just adds to that stress. Getting charity care removes that stress.”
Dozens of patients, patient advocates and social service agencies brought up the role that financial stress plays in the health of the poor trying to get health care. Not only does it cause them stress so severe that it can affect their health, it can prevent them from even seeking care.
“The financial stress is actually a barrier for them engaging in the process,” said Annette Fetchko, administrator of the Catholic Charities Free Health Care Center in Downtown Pittsburgh, which helps its patients apply for charity care at local hospitals. “There’s a fear aspect. They don’t even want to apply for fear of being turned down, and then getting a bill and not being able to pay.”
One man’s case
Tom Dugan understands that.
The 61-year-old Brighton Heights native had lived a happy, middle class life: married with a full-time job he enjoyed, great health insurance, and a home he was paying off. But five years ago in a cost-cutting move, he was laid off after 30½ years from his accountant’s job at the Allegheny County Department of Economic Development.
After he lost his job and his finances got worse, “my marriage fell into disarray after 32 years.”
“I lost my job, lost my marriage, then I lost my home,” he said. “I was in free fall.”
He took unemployment as long as he could and applied for jobs. But, “at my age, I was at the point at 55 or 56 that I don’t think for a lot of 50 year olds there are a lot of jobs out there.”
Then, after his unemployment check stopped, he was forced to take his retirement payments at a heavily discounted rate that left him in that narrow sliver of the population with too little income to pay for health insurance but too much to qualify for Medicaid.
During those first three years, without health insurance, what had been an annoying pain in his hip grew far worse and he could barely walk. He was turned down for disability twice.
“I had nowhere to turn,” he said.
He began doing what he was able to as a volunteer at the Little Sisters of the Poor senior citizen’s home in Brighton Heights, where his father was staying before he died three years ago. A friend there told him he should go to the Catholic Charities free clinic Downtown.
The clinic has a wide array of volunteer doctors with different specialties. But even more important for Mr. Dugan, Catholic Charities had a staff that could help him apply for charity care at UPMC Mercy, where he was referred for hip replacement surgery.
With their help, he filled out the UPMC’s two-page charity care application, which is similar to that of most hospitals in the region and first requires that a person apply and get turned down for the state’s Medicaid program, which he did. He also tracked down all the necessary documents: three months of bank statements, tax forms, asset documents, more than 20 in all.
“It’s a little cumbersome but something I got used to,” Mr. Dugan said. “It was a lot of legwork. Fortunately I’m an accountant, so I’m pretty organized.”
Helen Meyer, the clinic’s clinical care manager, and herself a former nurse, said finding out how difficult it was for patients to get charity care “was a huge revelation” to her. “I told people here that nurses and providers have no idea how it works.”
That kind of support paid off for Mr. Dugan. One day in fall 2014, he got a letter from UPMC saying he was covered for 100 percent of his care. “Fortunately for me, thank God,” he said.
He had successful surgery on Jan. 8, 2015, in which a surgeon put an 8-inch-long spike in his femur to connect to a new ball-and-socket hip.
After the surgery “the pain was gone,” he recalled. “When they pulled [a view of the spike and ball and socket] up on the screen after the surgery, that was my ‘Wow!’ moment.”
Another wow moment came a few weeks later when he saw the bill that was taken care of by charity care — $80,000 worth.
Even though he is still paying $100 a month on $9,000 he still owes UPMC from two weeks of rehabilitation — care that is not covered by UPMC’s charity care policy — knowing the surgical bill was taken care of “was a big deal because I always pay my bills.”
“That was one big stress removed from my life,” he said.
Sometimes you have to fight
Bruce Benjamin, 56, wishes he could tell a similar story about getting charity care. But his story, patient advocates say, is also common.
In 2010, he lost his job of 25 years at a Sears store, and in 2013, he was working part time at an office liquidation company with no health insurance.
Like Mr. Dugan, he found buying insurance on his own prohibitively expensive on his part-time income. Affordable Care Act Marketplace insurance was not available yet. He lives with and cares for his elderly mother in Schwenksville, 30 miles north of Philadelphia. He was in good health and had not faced any serious illnesses, even though he knew living without health insurance “was a calculated risk.”
He lost that bet in June 2013. He awoke one morning with a dime-size growth behind his knee. The next day, it was the size of a quarter. The next morning, he said, “I couldn’t even walk and I got a fever.”
He waited for two days before he went to Mercy Suburban Hospital’s emergency room in Norristown,Montgomery County, where they diagnosed him with a cellulitis infection. He was initially given some antibiotics and sent home. But his fever spiked again the next day and he returned for more treatment over parts of two days.
The two visits were the first and second visits to a hospital for his own care “since I was born,” he said.
While in the emergency room, the hospital had someone help him apply for Medicaid, and, if that didn’t work out, charity care.
But the person who filled out the forms for him over-represented what he made at his job, and improperly included an IRA as part of his assets, and he ended up getting turned down for both Medicaid and charity care.
“The hospital said I was denied because of my resources. And I kept telling them I qualified,” he said.
When the various bills for his care rolled in, he owed the hospital $23,000 and about another $7,000 to outside doctors and associates. He appealed the charity-care ruling and waited a year and a half as the calls and letters from collectors came in every week.
He eventually reached out to the Pennsylvania Health Law Project in Philadelphia, which helps patients obtain charity care when they think they’ve been improperly denied. The law project’s staff attorney, Kyle Fisher, had him contact the state’s Department of Human Service’s Bureau of Program Integrity.
Finally, in late 2014, the hospital sent him a letter saying they had calculated his income now without the IRA counting as an asset. But then they sent him a bill for $5,000, giving him an 80 percent discount on the original bill he was sent.
But Mr. Benjamin was sure he qualified for a 100 percent discount because his income was below 200 percent of the federal poverty level (up to about $23,000 for an individual in 2013) and he peppered the hospital with letters asking for clarification. He never got a reply.
The hospital declined to talk about his case, and it has not actively sought to collect from him for more than a year.
At the time, Mercy Suburban was owned by Mercy Health System, a Catholic-based system that still owns three hospitals in and around Philadelphia. In February it sold Mercy Suburban to Prime Healthcare, the same for-profit company that owns Lower Bucks Hospital.
“Of course, being a Catholic hospital when I was there didn’t mean much with their attitude about their patients’ financial situation,” Mr. Benjamin said. “I can’t complain about the care. They took care of me. But it wasn’t very Catholic-oriented on that financial end of it.”
Changes in charity issues
Mr. Benjamin’s case came just six months before he would have qualified for help buying insurance on the Affordable Care Act marketplace, which he later purchased, and two years from qualifying for Pennsylvania’s expanded Medicaid, also provided for under the federal law. He is now covered by the state’s Medicaid program.
Both would have eliminated the need for Mercy to provide him with charity care and saved the hospital at least a good chunk of that $30,000, and Mr. Benjamin two years of stress.
But another aspect of the federal law could now begin putting pressure on hospitals to provide more charity care, not less.
Starting this year, new rules implemented by the Internal Revenue Service require nonprofit hospitals to post notices about the availability of charity care in prominent places, including the emergency room (where most charity care begins), cashier areas and main lobbies, as well as on their websites. It also requires them to make the charity-care policy and application available online or readily at a hospital upon request.
There is another reason charity-care issues are prominent in Pennsylvania.
Three years after the state Supreme Court issued its ruling defining what is a “purely public charity” — including nonprofit hospitals — the issue could be put on the ballot. Republican lawmakers, backed most prominently by hospitals and their lobbyists, are pushing for a change to the state constitution that would give that definition power to the Legislature.
The House and Senate voted to approve the motion once in 2014, and the Senate approved it a second time — as required — last year. The House needs only to vote for it one more time before it is put on a statewide ballot, possibly later this year. If voters approve the measure, it will allow the Legislature to define what is a purely public charity after a series of hearings and debate.
At those hearings, charity care will “absolutely [be] one of the fundamental issues when this is all vetted and we will be discussing, because critics don’t think hospitals are providing enough charity care,” said Drew Crompton, general counsel for state Senate Republicans.
“We’ll have to debate what is uncompensated care and what is charity care and how their subgroups and subsets work together. Some people say bad debt is not really charity care because you might have gotten 40 cents on the dollar of that,” he said. “The problem is, it is very difficult to get inside the curtain on those charity-care and uncompensated-care issues.”
Though Texas, Illinois and Nevada have state requirements that nonprofit hospitals provide a minimum amount of charity care, hospitals and their trade associations have long argued that it does not make sense to set a statewide minimum in Pennsylvania and other states.
“We recommend that every hospital do a community benefit analysis,” said Rick Gundling, vice president of health care financial practices with the Healthcare Financial Management Association. “We can show what benchmarks are out there. The amount [of charity care] you provide depends on the area you are in.”
Mr. Crompton said given the passion over charity care at hospitals, at any public debate over the proposed constitutional amendment, it won’t be an academic, dispassionate discussion.
“It would be difficult enough if people could come in and make rational arguments,” he said. “But it’s going to turn into a political food fight.”
Sean D. Hamill: firstname.lastname@example.org; 412-263-2579; Twitter: @SeanDHamill.
How the data was analyzed
The Pennsylvania Health Care Cost Containment Council (PHC4) has been collecting charity care, bad debt and other hospital financial data since its inception in 1986. It's annual reports, though, only present charity care and bad debt for each hospital in the state as a combined figure known as "uncompensated care," and they represent it as a percentage of net patient revenue. But after the Post-Gazette filed a Right-to-Know request for data on both charity care and bad debt, separate from each other for each hospital, PHC4 provided data for every hospital in the state going back to 1995.
Hospitals provide charity care and bad debt to PHC4 "at charges," that is, at the price that hospitals use to negotiate reimbursement from insurers, but which only patients without insurance might pay. The "at charges" figure is an unrealistic representation of how much charity care and bad debt is provided, so, PHC4 converts the uncompensated care figure to a more realistic dollar amount using each hospitals revenue-to-charge ratio.
Given that, the Post-Gazette converted the at charges figures for each hospitals charity care and bad debt by this simple math formula using PHC4's data:
First, we multiplied a hospital's net patient revenue figure by the percentage of uncompensated care. That gave us a more realistic dollar figure for the combined total of charity care and bad debt.
Next, we divided the at charges figure PHC4 provided us for charity care by the total amount of charity care and bad debt, and then did the same for bad debt. That gave us the percentage of uncompensated care that is charity care, and the percentage that is bad debt.
We then multiplied those percentages by the realistic dollar figure we had gotten by multiplying net patient revenue and the percentage of uncompensated care, and we got separate figures of realistic dollars for both charity care and bad debt for every hospital.
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