Rhode Island

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Glossary of Terms

OVERVIEW: Rhode Island’s free care laws are some of the most comprehensive in the nation.  As of 2007, Rhode Island requires all hospitals to meet the “community standard” for the provision of charity care, community benefits, and uncompensated care for all inpatient and outpatient essential medical services as a condition of new or continued licensure.  State regulations set the minimum eligibility requirements that hospitals must use, although hospitals are free to expand those eligibility requirements.  State law sets uniform notification and application procedures and requires hospitals to establish an internal appeals process for charity care determinations.

CITATION:
Licensing of Health Care Facilities: Charity Care Requirements
Rhode Island General Laws § 23-17-43

Hospital Conversions Act
Rhode Island General Laws §§ 23-17.14-1 to 23-17.14-34

Rules and Regulations for Licensing of Hospitals
Code of Rhode Island Rules R23-17-HOSP; also cited as 14 090 007 Rhode Island Code Rules

Rules and Regulations Pertaining to Hospital Conversions
Code of Rhode Island Rules R23-17.14-HCA; also cited as 14 090 028 Rhode Island Code Rules

TERMINOLOGY:
Charity care
Free care
Hospital financial aid

REGULATORY OVERSIGHT:
The Department of Health has oversight authority for licensure of health care facilities, including the authority to promulgate rules and regulations related to the mandatory provision of charity care as a condition of licensure. See R.I. Gen. Laws §§ 23-17-36 23-17-43. The Director of the Department of Health shall conduct an annual review of each licensed hospital’s performance with regard to charity care and uncompensated care. 14 090 028 R.I. Code R. § 11.1. 

Under the Hospital Conversions Act, conversions require review and approval from both the Attorney General and the Department of Health.  R.I. Gen. Laws § 23-17.14-5.  But whereas the Department of Health may adopt rules, including measurable standards, as necessary to accomplish the purposes of the Act, the Attorney General shall adopt rules and regulations to do the same.  R.I. Gen. Laws §§ 23-17.14-31 to 23-17.14-32. 

DEFINITIONS AND DISTINCTIONS:
“Assets,” for purposes of determining eligibility for full and partial charity care, are defined in regulation as “cash, cash-equivalents and other hard assets that can be converted into cash, including: cash on hand, savings accounts, checking accounts, Certificates of Deposit (CDs), money market accounts, stocks (common and preferred), bonds, mutual funds, IRAs, 401(k)s, 403(b)s, 457s, cash-in-value of life insurance policies, personal property, motor vehicles other than for personal use, second homes and rental properties.”  14 090 028 R.I. Code R. § 1.5.  Primary residences and motor vehicles for personal use are expressly excluded.  Id. 

The “assets protection threshold” is defined as “the maximum amount of assets that may be held and still allow the patient/guarantor to be eligible for full charity care.”  14 090 028 R.I. Code R.  § 1.6.  Currently, the assets protection threshold is set in regulation at $8,000 for individuals and $12,000 for family units.  Id.

“Bad debt” is defined as services provided and billed that the hospital reports as uncollectible.  See R.I. Gen. Laws § 23-17.14-4(16); 14 090 028 R.I. Code R. § 1.7.  In order to qualify as bad debt, hospitals must demonstrate that the bad debt is uncollectible in audited financial statements.  Id.  Bad debt shall be cost-adjusted by applying a ration of cost to charges from the hospital’s Medicare Cost Reports in its statement of operations.  Id.

“Charity care” is defined in the Hospital Conversions Act as “health care services provided by a hospital without charge to a patient and for which the hospital does not and has not expected payment.”  R.I. Gen. Laws § 23-17.14-4(4).   Charity care shall be rendered to patients determined to be uninsured, underinsured or otherwise eligible at the time of service.  R.I. Gen. Laws § 17.14-4(4); 14 090 007 R.I. Code R. § 1.6; 14-090-028 R.I. Code R. § 1.8.  It expressly excludes bad debt and must be cost-adjusted using the ratio of cost to charge found in a hospital’s Medicare Cost Reports.  14 090 007 R.I. Code R. § 1.6.  “Charity care” is synonymous with “free care.”  14 090 028 R.I. Code R. § 1.20. 

“Uncompensated care” is defined to include “free care, which the hospital provides at no cost to the patient, bad debt, which the hospital bills for but does not collect, and [Medicaid shortfall].” R.I. Gen. Laws § 23-17.14-4(16); 14 090 028 R.I. Code R. § 1.33.

FREE CARE AS A COMMUNITY BENEFIT:
The Hospital Conversions Act defines “community benefit” as “the provision of hospital services that meet the ongoing needs of the community for primary and emergency care[.]”  By definition, community benefit shall include, but is not limited to, charity care and uncompensated care.  R.I. Gen. Laws § 23-17.14-4(5); 14-090-028 R.I. Code R., § 1.9.

ELIGIBILITY REQUIREMENTS:
On April 1, 2007, it became a requirement for all hospitals to meet the statewide community standards for the provision of community benefits, uncompensated care, and charity care as a condition of new and continued licensure.  See R.I. Gen. Laws § 23-17-43; 14 090 028 R.I. Code R. §§ 2.2, 11.0.  The community standards for the provision of charity care apply to all uninsured, low-income Rhode Island residents who are ineligible for government- or employer-sponsored health insurance programs.  14 090 028 R.I. Code R. § 11.3(b).  The standards set forth in regulation represent minimum requirements.  14 090 028 R.I. Code R. § 11.3(a).  Hospitals may expand their financial assistance programs, but they shall not reduce the assistance they offer or add their own eligibility requirements.  Id.   

Community standards for the provision of charity care are as follows:

• Mandatory provision of full charity care (free care) for patients with incomes up to 200 percent FPL.  At a minimum, all hospitals shall provide full charity care, or free care, to uninsured patients or their guarantors with annual incomes at or below 200 percent FPL.  14 090 028 R.I. Code R. § 11.3(c). 
• Mandatory provision of partial charity care (discounted care) for patients with incomes between 200-300 percent FPL.  All hospitals shall provide partial charity care on a sliding-scale basis to patients or their guarantors with incomes between 200 and 300 percent FPL. 14 090 028 R.I. Code R. § 11.3(f).  However, each individual hospital shall determine its own sliding-scale fee structure, based both on the hospital’s evaluation of its service area’s needs and the hospital’s own financial resources.  Id. 
• Optional asset test for full and partial charity care and limitations on billing when the asset test is used.  Hospitals may also require that applicants for charity care pass an assets test in addition to meeting the income requirements laid out above.  14 090 028 R.I. Code R. § 11.0(d) and (f).  In both instances, hospitals may require applicants to show that their assets do not exceed the assets protection threshold established in the regulations (see definitions of “Assets” and “Assets protection threshold,” above).  Id.  The regulations require that, if a hospital opts to include the asset test as a requirement for eligibility for full free care, it must offer the highest discount available under its partial charity care policy to applicants who meet the income requirement (i.e., have incomes under 200 percent FPL) but whose assets exceed the asset protection threshold.  14 090 028 R.I. Code R. § 11.3(e).  In these cases, hospitals that proceed to collections may only pursue an amount equivalent to the patient’s/guarantors actual assets minus the asset protection threshold.  Id.  Limitations are not as strict for hospitals that choose to add the asset test for partial charity care.  14 090 028 R.I. Code R. § 11.3(f).  These hospitals have discretion in determining how the asset test affects eligibility for partial charity care.  Id.
• Documentation of patient financial information.  Hospitals may deny patients/guarantors eligibility for charity care if they do not provide the information and documentation needed to determine eligibility for charity care and/or other programs that might pay for the care.  14 090 028 R.I. Code R. § 11.3(g).  Once an application for charity care is denied, the hospital may label the account as bad debt and pursue it into collections as outlined in regulation.  Id. 

FINANCING SOURCE: N/A

SERVICES COVERED:
The services covered under the community standard for the provision of charity care extend to “all inpatient and outpatient essential medical services routinely billed by the hospital and provided under the hospital's license, and routinely reimbursed by [Medicaid].”  14 090 028 R.I. Code R. § 11.3(b).  The word “essential” is further defined to mean “hospital services that are reasonably required to diagnos[e]…alleviate, or prevent…conditions that endanger life or cause suffering or pain, or result in illness or infirmity, or threaten to cause or aggravate a handicap, or cause physical deformity or malfunction, and there is no other equally effective more conservative or substantially less costly course of treatment available or suitable for the person requesting the service.”  14 090 028 R.I. Code R. § 1.15.

NOTIFICATION REQUIREMENTS:
Each hospital shall provide the public with a “Notice of Hospital Financial- Aid.” 14 090 028 R.I. Code R. § 11.3(h).  The Notice must be approved by the Director of the Department of Health, must be standard letter size, and must be prominently displayed in the hospital’s emergency departments, admission areas, outpatient care areas, and website.  Id.  (Please note that the regulations include a template for the Notice, listed at 14 090 028 R.I. Code R. § 11.3(h) as “Attachment A.”)  A copy of the Notice shall also be provided on each hospital patient bill.  14 090 028 R.I. Code R. § 11.3(i).

Furthermore, each hospital shall provide notice of the financial aid criteria it uses in determining eligibility for charity care and shall include the discount schedule it uses for partial charity care.  14 090 028 R.I. Code R. § 11.3(j).  The form used to outline the hospital’s financial aid criteria shall be subject to the Director of the Department of Health’s approval and shall be made available to everyone upon request.  Id.  (Please note that the regulations include a template for the notice of a hospital’s financial aid criteria, listed at 14 090 028 R.I. Code R. § 11.3(j) as “Attachment B.”)  

Each hospital shall make both the Notice of Hospital Financial-Aid and the hospital’s financial aid criteria available in languages other than English in accordance with Standards 4 and 7 of the  “Standards for Culturally and Linguistically Appropriate Services in Health Care,” which is based on Title VI of the Civil Rights Act of 1964).  14 090 028 R.I. Code R. § 11.3(h) and (j). 

Each hospital must make its appeals process and debt collection process available to all persons upon request.  14 090 028 R.I. Code R. § 11.3(m) and (n). 

APPLICATION PROCESS:
Each hospital is required to use either a standardized “Application for Hospital Financial-Aid” (listed at 14 090 028 R.I. Code R. § 11.3(k) of the regulations as “Attachment C”) or one approved by the Director of the Department of Health.  14 090 028 R.I. Code R. § 11.3(k).  With the exception of the deletion of the “Assets” section for hospitals that do not apply the asset test, any material change to the standardized application—both additions and deletions—must first be approved by the Director.  Id. 

A hospital must make a determination of eligibility for charity care and notify the patient/guarantor of its decision within fourteen (14) days of receiving a completed application for hospital financial aid.  14 090 028 R.I. Code R. § 11.3(l).    

GRIEVANCE/APPEAL PROCESS:
Each hospital shall establish an appeals process set forth in writing for instances in which a patient/guarantor is denied charity care.  14 090 028 R.I. Code R. § 11.3(m).  The hospital shall adopt the appeals process as part of its formal hospital policy and shall make it available to anyone upon request.  Id.  

REPORTING REQUIREMENTS:
On or before March 1, each licensed hospital must provide the Director of the Department of Health with a report detailing the cost of charity care, bad debt, contracted Medicaid shortfalls, and any additional relevant information. R.I. Gen. Laws § 23-17.14-15(d).  If the Director believes that the hospital is not providing an adequate amount of charity care, there will be a hearing with ten days notice to the hospital. R.I. Gen. Laws § 23-17.14-15(e).

Each hospital shall provide the Department of Health with the following forms, either on an annual basis or as required by the Department Director:

• Its annual Financial-Aid Data Filing (see Attachment D in the regulations);
• The Notice of Hospital Financial-Aid it publicizes;
• A copy of a hospital bill including the Notice of Hospital Financial-Aid;
• A list of the hospital’s financial-aid criteria for charity care, including its discount schedule for partial charity care and how the asset test is used in determining eligibility for partial charity care, if applicable;
• The Application for Hospital Financial-Aid it uses;
• Its adopted appeals process; and
• Its adopted collections process.  14 090 028 R.I. Code R. § 11.3(o).

PENALTIES FOR NONCOMPLIANCE:
Licensed hospitals are required to meet the community standard for the provision of charity care as a condition of new and continued licensure.  R.I. Gen. Laws §§ 23-17-43 and 23-17.14-15(a); 14-090-028 R.I. Code R., § 2.2. 

A hospital’s knowing violation or failure to comply with any provision of the Hospital Conversions Act, as well as knowingly or willingly providing the Director of the Department of Health with false or incorrect information, may result in the suspension or revocation of its license, a prohibition against admitting new patients or providing new services, or other corrective action.  R.I. Gen. Laws § 23-17.14-30; 14 090 028 R.I. Code R. § 14.1.  The Superior Court may also impose a civil monetary penalty of up to $1,000,000 or a criminal sanction of up to five (5) years after notice and opportunity for a prompt and fair hearing.  Id. 

OTHER:
Under the Hospital Conversions Act, each hospital is required to establish and adopt, as formal hospital policy, a written debt collections process and to make this policy available to all persons upon request as a component of the statewide standard for the provision of charity care.  14 090 028 R.I. Code R. § 11.3(o).  With regard to the statewide standard for the provision of uncompensated care, the Act permits hospitals and their agents to attach a patient’s/guarantor’s primary residence for bad debt.  14 090 028 R.I. Code R. § 11.4.  They are prohibited, however, from forcing the home into foreclosure.  Id. 

The Rhode Island Department of Health maintains a resource on its website entitled "Rules and Regulations Pertaining to Hospital Conversions," which includes copies of sample policy disclosure notices.  This document provides a centralized location for Rhode Island's various laws regulating the provision of free care at hospitals.