Synopsis: This retrospective cross-sectional study examines the significant variability in charity care provided by private, non-profit hospitals in the United States. While non-profit hospitals have a legal obligation to deliver free or discounted care, there are no uniform requirements for implementation. The authors conclude that the wide range of eligibility criteria and the existence of opaque or burdensome application processes exacerbate the problems charity care is meant to alleviate.
Summary: A 2022 survey estimates that approximately 100 million Americans carry medical debt, 80% of which is held by households with zero or negative net worth. Hospital charity care, also known as financial assistance, is both a legal obligation of non-profit hospitals (tied to their tax-exempt status) and a policy strategy (outlined in the Affordable Care Act) to improve access to care for low-income patients. Importantly, there are no federal requirements governing how non-profit hospitals implement charity care or how much hospital revenue must be spent on financial assistance. Twenty states (CA, CO, DE, GA, IL, IN, KS, ME, MD, NV, NJ, NY, OH, OR, RI, SC, TN, VA, WA) have set mandatory minimums regarding the amount of money that must be spent on such care.
Using a novel data source of financial assistance policies from 2,989 private, non-profit hospitals in 2021, the authors examined state- and national-level income limits for free and discounted care as compared to state median income levels. Additionally, the authors reported the frequency of requirements related to residency, insurance status, assets, minimum hospital bill amounts, citizenship, and other documents needed to qualify for charity care.
The authors found that the median cutoffs used by hospitals for the provision of free and discounted care were 200% and 400% of the 2021 federal poverty line (FPL; $12,880 for one individual or $26,500 for a family of four). Cutoff marks for free care ranged from 41% to 600% of the FPL. When corrected for state median incomes, these cutoffs were revealed to be most generous among hospitals on the West Coast and in the South. Approximately 54% of hospitals investigate assets when determining eligibility, with variable exclusions of life necessities such as residences, retirement savings, and vehicles. A majority have document requirements (e.g., tax forms, pay stubs). Nearly one in ten required proof of citizenship, and one in five required proof of in-state residency. Charity care policies also appeared to be regressively responsive to demand within their respective markets—hospitals with poorer and more uninsured payer mixes tended to have more restrictive income eligibility requirements.
Limitations of the study include the over-representation of large hospital systems in the sample, thereby limiting generalizability. Analysis was further limited by the inability to detail specific discounts applied by hospitals when a patient qualified for charity care.
Bottom Line: This study confirmed wide variability in policies regarding charity care as provided by private, non-profit hospitals in the U.S. There are no federal guidelines for charity care, and, as of 2023, only twenty states provide state-level guidance. Consequently, there is significant potential for disparate provision of charity care to vulnerable, low-income Americans.
The financial assistance policy and application process for the University of Pennsylvania Health System can be found on the hospital’s website.