Presumptive Eligibility for Charity Care: The Risk of Presuming Your Hospital is Compliant

Jason Lerch
Blog Post03/05/2018

Hospitals across the country are taking steps to determine a patient’s eligibility for charity care based on several key criteria, but some haven’t been informing patients of their findings. Hospitals have given various reasons why they don’t tell patients — from noting the law simply doesn’t mandate the action, to claiming that it’s labor intensive and often ineffective to track down each and every patient who qualified.

However, under a newly revised state law which took effect in December, Pennsylvania hospitals should notify patients if they’re eligible for charity care, even if the determination is made without the patient’s knowledge. Failure to comply — or show the hospital took reasonable steps to comply — will prevent them from receiving state charity reimbursement funds.

While this aspect of the law is new to Pennsylvania, the concept is hardly unique. Several other states — like California, Colorado, and more — have similar mandates in place already, and it’s likely many others will follow suit.

Through what’s known as “presumptive eligibility”, hospitals qualify patients for charity care as part of the benefit they provide to the surrounding community. Using technology that leverages credit-score-like data, demographic information and social media data, hospitals can determine whether patients are likely to qualify for charity care. Mandate or not, informing patients of charitable debt forgiveness benefits both the patient and the hospital.

Patients who fear the financial impact of medical services are often afraid to seek care when they need it. By receiving information about their charity care eligibility, patients are less burdened, allowing them to focus on one thing — getting well.   

Additionally, by determining charity care eligibility and notifying patients, hospitals are able to receive funding from the state and offset what would likely be bad debt and ultimately uncompensated care. Hospitals also can maintain greater patient satisfaction and better fulfill their mission of providing a benefit to their communities, while more efficiently using their debt collection resources to pursue payment from those patients more able and likely to pay for services.

Whether located in Pennsylvania, California, Colorado or elsewhere, hospitals must be mindful of the risk associated with noncompliance. The ability to demonstrate a reasonable attempt to notify was made is not as easy as it may sound. Systems must be put in place to track attempts to locate patients. And for not-for-profit hospitals, failure to comply means losing their tax-exempt status. It’s only a matter of time before the notification mandate is adopted by other states, so hospital administrators would be wise to implement solutions that not only assist in determining presumptive eligibility, but also establish effective oversight mechanisms. By streamlining their charity program and supporting compliance with IRS and state regulations, hospitals will be well-positioned to better assist low-income patients in their path toward wellness.

Whether you’re seeking solutions for presumptive eligibility determinations or to find and inform eligible patients of debt forgiveness, TransUnion Healthcare can help. Contact us to learn more about Identity Verification, which helps confirm a patient’s identity; as well as our Charity and Financial Screening, which can determine whether a patient is likely to qualify for Medicaid, charity care or other government assistance programs.

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