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OVERVIEW: In New York, hospitals are reimbursed for providing charity care from the Hospital Indigent Care Pool, which is financed through regional hospital assessments. While the law does include some strong requirements around notification of charity care policies and discounted charges to low-income residents as a condition of participating for Pool reimbursement, its distribution mechanism has received some recent criticism for lack of accountability and connection to charity care actually provided. Nonprofit hospitals also have obligations to provide charity care through state law community service plan requirements.
General Hospital Indigent Care Pool
N.Y. Pub. Health §§ 2807-c and 2807-k
Community Service Plans
N.Y. Pub. Health Law §§ 2803-l and 2805-a
N.Y. Comp. Codes R. and Regs. 10 § 86-1.11
The Commissioner of the Department of Public Health is tasked with oversight of the Indigent Care Pool.
DEFINITIONS AND DISTINCTIONS:
For purposes of the Hospital Indigent Care Pool, the following definitions apply:
“Bad debt” is defined as “the amounts which are considered to be uncollectible from accounts and notes receivable which were created or acquired in providing services.” See N.Y. Comp. Codes R. & Regs. Tit. 10, § 86.1-11.
“Charity care” is defined as “the reduction in charges made by the provider of services because the patient is indigent or medically indigent.” See N.Y. Comp. Codes R. & Regs. Tit. 10, § 86.1-11.
“Uncompensated care need” is defined as “losses from bad debts [valued at cost]…and the costs of charity care of a general hospital for inpatient and ambulatory services, excluding referred ambulatory services[.]” The definition excludes the cost of services offered as an employee benefit or courtesy. N.Y. Pub. Health Law § 2807-k(1)(d).
“Uninsured care” is defined as “losses from bad debts [valued at cost]…and the costs of charity care of a general hospital for inpatient and ambulatory services, excluding referred ambulatory services,” which are not eligible for payment by a government agency, insurer, or other third-party payor. N.Y. Pub. Health Law § 2807-k(1)(e).
FREE CARE AS A COMMUNITY BENEFIT:
Charity care is included as an element of a nonprofit hospital’s community service plan. N.Y. Pub. Health Law § 2803-l.
As explained in the Overview, hospitals may be reimbursed from the Indigent Care Pool for services provided as uncompensated care. To be eligible for distributions from the Pool, a hospital’s “targeted need”—what it anticipates providing in uncompensated care in proportion to its reported costs—must exceed, at a minimum, 0.5 percent. N.Y. Pub. Health § 2807-k(4)(c). In addition, hospitals must meet certain minimum billing and collection requirements approved by the Commissioner of Health in order to participate in Pool reimbursement. N.Y. Pub. Health § 2807-k(9).
For a hospital to receive Pool distributions, it must—at a minimum—give discounts to residents with incomes below 300 percent FPL for hospital services. N.Y. Pub. Health Law § 2807-k(9-a)(b). For patients at 100 percent FPL or lower, hospitals may charge only a nominal payment amount for services. N.Y. Pub. Health Law § 2807-k(9-a)(b)(i). For patients with incomes between 100 and 250 percent FPL, a proportional sliding fee schedule is used to determine that amount that a patient must contribute. N.Y. Pub. Health Law § 2807-k(9-a)(b)(iii). Patients with incomes at least 250 percent FPL must not be charged more than a hospital might charge to the “highest volume payor” (such as a private insurer), or to Medicare or Medicaid, whichever is greater. Id.
With the approval of the Commissioner, hospitals may include a consideration of a patient’s assets in making eligibility determinations. Hospitals may not include a patient’s primary residence, funds in tax-deferred savings or retirement accounts, college savings funds, or vehicles regularly used by the patient or his or her family in the asset determination. N.Y. Pub. Health § 2807-k(9-a)(b)(vi).
The free care system is financed through a series of statewide and regional pools. N.Y. Pub. Health Law § 2807-c(16). The regional pools are financed through an assessment on general hospitals of 5.48 percent of their total reimbursable inpatient costs, excluding Medicare but including bad debt. NY Pub. Health Law § 2807-c(14)(c).
Emergency services and medically necessary services for eligible residents of a hospital’s “primary service area” as determined by the Commissioner are covered under these provisions. N.Y. Pub. Health Law § 2807-k(9-a)(f).
Free care policies and procedures shall be clear, understandable, and in writing. N.Y. Pub. Health Law § 2807-k(9-a)(c). Such polices must also be made publicly available in summary form and each general hospital participating in the pool shall ensure that every patient is made aware of the existence of such policies and procedures and is provided, in a timely manner, with a summary of such policies and procedures upon request. Id. Any summary provided to patients shall, at a minimum, include specific information as to income levels used to determine eligibility for assistance, a description of the primary service area of the hospital and the means of applying for assistance. Id. In general hospitals with 24-hour emergency rooms, the free care policies must be posted conspicuously, in language-appropriate versions. Id. All hospitals must notify patients of its free care program at intake or registration. All hospitals must provide information about free care and how to obtain it on bills and other statements sent to patients. Id.
Patients are permitted to apply for assistance within at least ninety (90) days of the date of discharge or date of service and provide at least twenty (20) days for patients to submit a completed application. N.Y. Pub. Health Law § 2807-k(9-a)(e). Policies and procedures may require that patients seeking payment adjustments provide appropriate financial information and documentation in support of their application, provided, however, that such application process shall not be unduly burdensome or complex. Id. General hospitals shall, upon request, assist patients in understanding the hospital's policies and procedures and in applying for payment adjustments. Id.
Application materials shall include a notice to patients that upon submission of a completed application, including any information or documentation needed to determine the patient's eligibility pursuant to the hospital's financial assistance policy, the patient may disregard any bills until the hospital has rendered a decision on the application.
N.Y. Pub. Health Law § 2807-k(9-a)(c). The application must be available in all “primary languages” of the patients served by the hospital. N.Y. Pub. Health Law § 2807-k(9-a)(e). A “primary language” includes a language spoken by five percent or more of non-English speaking patients that visit the hospital in a given year, and a language spoken by more than one (1) percent of the hospital’s service area population. Id.
Decisions on applications for indigent care must be made within thirty (30) days of receipt of a completed application. N.Y. Pub. Health § 2807-k(9-a)(e). Policies and procedures shall require that the hospital issue a decision on an application in writing with information on how to appeal the denial and shall require the hospital to establish an appeals process under which it will evaluate the denial of an application. Id.
At the end of the fiscal year, each general hospital must file an expense report with the Commissioner of Health detailing “hospital expenses incurred…for which payment was not received and is not expected” and for which the hospital is seeking reimbursement from the Indigent Care Pool. See N.Y. Pub. Health Laws § 2805-a(2)(a). The report must include definitions of bad debt and charity care. Id. All information submitted in these reports must be made available to the public subject to conditions established by the Commissioner. N.Y. Pub. Health Laws § 2805-a.
Hospitals must provide a written report to the Commissioner that includes copies and descriptions of its financial aid policies and procedures and material which is distributed to patients. N.Y. Pub. Health Law § 2807-k(9-a)(j). The description of the financial aid program shall include the income levels of patients on which eligibility is based, the financial aid eligible patients receive and the means of calculating such aid, and the service area, if any, used by the hospital to determine eligibility. Id. There is no indication of a requirement that this report being provided to the Commissioner on an annual or other periodic basis. Id.
As part of its community service plan requirements, the governing body of a voluntary, nonprofit general hospital must publish an annual implementation report that demonstrates how the hospital is meeting the needs of its community, providing charity care services, and improving access to health care services by underserved populations. N.Y. Pub. Health Law § 2803-l(3). The hospital must make this report available to the public and file it annually with the Commissioner. N.Y. Pub. Health Law § 2803-l(3)-(4). At least every three years, the hospital must also file a report detailing changes and amendments to its financial and operational commitments to achieve these objectives. N.Y. Pub. Health Law § 2803-l(4).
PENALTIES FOR NONCOMPLIANCE: N/A
The law has stringent debt collection rules. A hospital’s policies cannot permit forced sale or foreclosure of a patient's primary residence in order to collect an outstanding medical bills. N.Y. Pub. Health Law § 2807-k(9-a)(h). A hospital shall refrain from sending an account to collection if the patient has submitted a completed application for financial aid, including any required supporting documentation, while eligibility for aid is determined. Id. Additionally, a patient must be notified in writing that a debt is being referred to collections not less than thirty (30) days prior to such action taking place. Id. The collection agency must obtain the hospital's written consent prior to beginning legal action. Id. All staff who interact with patients or who have responsibility for billing and collections must be trained in collection policies and procedures and the hospital must devise a method for measuring compliance with them. Id. Any collection agency under contract with a general hospital for the collection of debts must follow the hospital's financial assistance policy, including providing information to patients on how to apply for financial assistance where appropriate. Id. Such policies and procedures shall prohibit collections from a patient who is determined to be eligible for medical assistance through Medicaid at the time services are delivered. Id.
Hospitals must offer installment plans for the amount owed for services by free care eligible patients. N.Y. Pub. Health Law § 2807-k(9-a)(d). A hospital may not charge more than 10 percent of a patient’s gross monthly income as part of a monthly installment payment plan. Id.
Chapter 58 of the Laws of 2007 required the New York State Department of Health to issue a report on the status of Indigent Care. That report, entitled “Report on the Hospital Indigent Care Pool” is available online here.