Minnesota

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Glossary of Terms

OVERVIEW:  Minnesota hospitals must submit extensive reports to the state about the free care and other community benefits they provide.  While there are no standard eligibility requirements, in order to be able to report any amount as free care, facilities must have a free care policy that contains specific eligibility criteria.  In addition, an agreement between the state Attorney General and the state hospital association sets guidelines limiting what hospitals can charge uninsured patients and describing how hospitals must handle billing and collections.

CITATION:
Health Care Cost Information Act
Minnesota Statutes §§ 144.695 to 144.703

Hospital and Surgical Center Reporting
Minnesota Rules §§ 4650.0102 to 4650.0115

Health Care Provider Reporting
Minnesota Rules §§ 4651.0100

TERMINOLOGY:
Charity care
Community care

REGULATORY OVERSIGHT:
Under the Health Care Cost Information Act, the Commissioner of the State Department of Public Health has authority to oversee, inspect, and publish all annual reports related to the costs associated with hospitals’ levels of community care and community benefits.  Minn. Stat. §§ 144.698; 144.699, Subdiv. 5. 

DEFINITIONS AND DISTINCTIONS:
“Bad debt” is defined differently for hospitals than it is for other health care providers.  Hospitals must quantify “bad debt expense” as the amount charged where the hospital expected payment and the patient was “unwilling” to pay.  Minn. Rules 4650.0102, Subp. 7a.  With regard to other health care providers, “bad debt” is defined as the amount of uncollected charges from patients who were considered able to pay where a collection attempt has been made (emphasis added).  Minn. Rules 4651.0100, Subp. 2.  For reporting purposes, all facilities must include any unpaid patient responsibilities (e.g., deductibles, co-pays, coinsurance) as “bad debt expenses.”  Minn. Rules 4650.0117(B).

“Charity care,” by definition, does not include contractual allowances or professional courtesy discounts; bad debt; “underpayments” for operating public programs; unreimbursed research or professional education costs; and community service or outreach activities.  Minn. Rules 4650.0115, Subp. 2(E) – (J).  Furthermore, it expressly excludes “services for patients against whom collection actions were taken that resulted in a financial obligation documented on a patient’s credit report.” Minn. Rules 4650.0115, Subp. 2(K).  Charity care may include:

• Services that providers are obligated to render regardless of a patient’s ability to pay;
• Services provided to patients who qualify for partial coverage under the facility’s charity care guidelines;
• Services provided to patients who meet a facility’s eligibility criteria for charity care who have not completed an application for public assistance, even though they might be eligible (NOTE: the facility must have made “reasonable effort” to encourage the patient to complete the application); and
• Services provided to individuals whose eligibility for charity care was determined through third parties employed by the hospital for information-gathering purposes.  Minn. Rules 4650.0115, Subp. 2(A)-(D).

In addition to these definitions, “charity care” has a slightly different definition for hospitals than it is for other health care providers.  For purposes of hospital reporting, a hospital’s “charity care adjustment” is the “amount that would have been charged…for rendering free or discounted care to persons who cannot afford to pay and for which the facility did not expect payment.” Minn. Rules 4650.0102, Subp. 9.  By contrast, for purposes of other health care provider reporting, “charity care” is defined as “the total amount of dollars written off for uninsured or underinsured individuals who cannot pay for total charges billed because of limited income or unusual circumstances.”  Minn. Rules 4651.0100, Subp. 4.

“Community care” is defined as “costs for medical care that a hospital has determined is charity care as defined [in regulation] or for which the hospital determines after billing for the services that there is a demonstrated inability to pay.” Minn. Stat. § 144.699, Subdiv. 5(c).  Bad debt expense and discounted charges to uninsured patients are expressly excluded from this definition.  Id.

FREE CARE AS A COMMUNITY BENEFIT:
“Community care” is not required, but the costs of rendering community care are included in the definition of “community benefit.”  Minn. Stat. § 144.699, Subdiv. 5(b). 

ELIGIBILITY REQUIREMENTS:
There are no standard eligibility requirements for financial assistance. However, in order to be able to report any amount as “charity care,” facilities must have a charity care policy that contains specific eligibility criteria.  Minn. Rules 4650.0115, Subp. 1(B). 

FINANCING SOURCE: N/A

SERVICES COVERED: N/A

NOTIFICATION REQUIREMENTS:
In order to claim a “charity care adjustment,” facilities must communicate their charity care policies to patients or make them otherwise available.  Minn. Rules 4650.0115, Subp. 1(B).

APPLICATION PROCESS: N/A

GRIEVANCE/APPEAL PROCESS: N/A

REPORTING REQUIREMENTS:
General.  Minnesota has a complex set of reporting requirements for its health care providers, some of which apply across the board.  For instance, in order to claim a “charity care adjustment” in the reports discussed below, a health care facility must meet the following requirements:

• Generate and record a charge;
• Have a charity care policy and communicate that policy or otherwise make it available to patients;
• Make a reasonable effort to identify a third-party payer for services, including public programs;
• Encourage and aid patients in applying for public programs, where applicable; and
• Ensure the patient meets the facility’s eligibility criteria for charity care.  Minn. Rules 4650.0115, Subp. 1. 

In reporting charity care adjustments, facilities must show the total dollar amount and number of patient contacts for individuals who fall into the following categories:

• Patients with family incomes at or below 275 percent FPL;
• Patients with family incomes above 275 percent FPL; and
• Patients for whom the facility, after reasonable effort, was unable to determine family income.  Minn. Rules 4650.0115, Subp. 3.

Hospitals.  As part of their annual reporting requirements, hospitals must report financial information about the community benefits they provide, “including services provided at no cost or for a reduced fee to patients unable to pay,” either directly to the Commissioner of Public Health or to an approved, voluntary nonprofit agency.  Minn. Stat. § 144.698, Subdiv. 1(5).  All reports, save for privileged medical information, is open to public inspection.  Minn. Stat. § 144.698, Subdiv. 4.  The Commissioner of Public Health is required to publish a detailed annual report on the cost of community benefits and community care for each hospital required to report financial information under the Act.  Minn. Stat. § 144.699, Subdiv. 5(a).  These annual community benefits reports must show both dollars spent and the percentage of the hospital’s total operating costs, valued at cost, for “community care”—which, by definition, includes charity care and excludes discounts offered to the uninsured.  Minn. Stat. § 144.699, Subdiv. 5(a)-(b), (d).  In addition, the Commissioner of Public Health must:

• Provide all reported information to the Attorney General upon request;
• Prepare and file summaries and other supplementary reports based on the hospitals’ filings, and make statistical information available for legislative policymaking; 
• Ensure that the total costs, revenues, services, and overall utilization of each hospital and outpatient surgical center are reported to the public in a consumer-friendly form; and
• Obtain a current rate schedule from each hospital.  Minn. Stat. §§ 144.699, Subdiv. 3 through 5; 144.701 Subdiv. 1 through 3.

Hospitals licensed in Minnesota, including psychiatric and specialty hospitals, must also submit annual financial reports that show the following:

• A statement of adjustments and uncollectibles by a) payer type,  b) for charity care, and c) by inpatient/outpatient category;
• Public funding for operations;
• Donations and grants for charity care with estimates of the percentage received from private and public sources; and
• Income or loss from hospital operations.  See Minn. Rules 4650.0112, Subp. 3.

Hospitals must include a copy of their charity care policy in their financial reports and describe the charity care services they provide.  Minn. Rules 4650.0112, Subp. 3(K).  They must also provide some description of their eligibility criteria and sliding fee schedule, at least with regard to income and asset guidelines and the impact of Medical Assistance status on eligibility (if applicable).  Id. 

Outpatient surgical centers.  Outpatient surgical centers must also submit annual reports. These reports must include a statement about adjustments and uncollectibles by type of payer, and for charity care, a description of charity care policies, including income guidelines, asset guidelines, medical assistance status impact, and sliding fee schedules, and a general description of the change in the demand for charity care to be provided in the budget year, and a general estimate of the change in the amount of charity the surgical center expects to provide in the budget year. Minn. R. 4650.0113.

Other.  Other health care providers must also file annual financial reports with the Commissioner of the Department of Health that include a statement of charity care and bad debt.  See Minn. Rules 4651.0120(L).

PENALTIES FOR NONCOMPLIANCE:
A facility may be fined $100 for failing to comply with these Rules, and $10 additionally per day that the facility remains out of compliance. The maximum fine that may be imposed is $1000. Minn. R. 4650.0173

The commissioner of public health may issue orders and assess administrative penalties up to $5,000 against voluntary nonprofit reporting organizations for violating a reporting requirement under the Health Care Cost Information Act.  Minn. Stat. § 144.7022.  The Attorney General may assist in enforcing the order.  Minn. Stat. § 144.7022, Subdiv. 9.  The commissioner may also adopt, through regulation, a scheme of fines for hospitals that fail to comply with these reporting requirements.  Minn. Stat. § 144.703, Subdiv. 1.

OTHER:
Community Clinic Grant Program.  In 2006, the Office of Rural Health and Primary Care implemented the Community Clinic Grant Program as authorized by the Legislature in 2001.  Minn. Stat. § 145.9268.  The program was established to award grants that support nonprofit clinics and certain other governmental entities in providing clinical services to low-income populations.  Id.  To qualify for funds, a nonprofit clinic must a) provide medical, preventive, dental or mental health primary care services to a rural or low-income population, and b) it must use either a sliding fee scale or some other procedure to determine eligibility for charity care to make certain that no one is denied care because they are unable to pay.  Id. 

Price lists.  Under the Health Care Cost Information Act, the Commissioner of Public Health must encourage health care providers to publish price lists for common procedures and diagnostic codes in order to foster price competition between providers.  Minn. Stat. § 144.699, Subdiv. 2(a).

Limits on hospital charges to the uninsured.  In April 2007, Minnesota’s Attorney General announced the five-year extension of an agreement with the Minnesota Hospital Association that set guidelines a) limiting what hospitals will charge uninsured patients and b) how hospitals will handle billing and collections, as follows:

• For uninsured patients with annual household incomes under $125,000, hospitals agreed to limit charges to the amount they charged their largest insurer for the same service in the previous year.
• Prior to pursuing legal action or garnishing a patient, hospitals agreed to verify the debt; confirm that all appropriate insurance companies were billed; offer the patient a payment plan; and offer the patient any cost reduction available under the hospital’s charity care policy.
• With regard to debt collection, hospitals agreed to establish “zero tolerance” policies for abusive debt collection practices.  They agreed to “periodically review [their] relationships with third-party debt collectors…to ensure that collectors are acting in accordance with the law and the hospital’s mission” and to ensure that default judgments were not obtained until patients had a fair opportunity to respond.  (See the Attorney General’s website for more information about the agreement.)

Principles and Guidelines for Financial Aid and Charity Care At Minnesota Hospitals.  The Minnesota Hospital Association (MHA) has produced a resource that sets forth a tentative framework of standards and guidelines regarding hospital financial assistance and billing practices.  While the framework contained in this document is not legally binding, the MHA states that the principles contained therein "communicate what patients can expect from hospitals" in Minnesota.  The Guidelines contain guiding principles for notifying patients of the availability of assistance, substantive suggestions regarding the scope and extent of hospital assistance policies, and suggested guidelines for billing and collection policies.