Charity care
Encyclopedia
In the United States
, charity care (also known as uncompensated care) is health care
provided for free or at reduced prices to low income patients. The percentage of doctor
s providing charity care dropped from 76% in 1996-97 to 68% in 2004-2005. Potential reasons for the decline include changes in physician practice patterns and increasing financial pressures. In 2006, Senate
investigators found that many hospital
s did not inform patients that charity care was available. Some for-profit hospitals provided as much charity care as some non-profit hospitals. Investigators also found non-profit hospitals charging poor, uninsured
patients more than they did patients with health insurance
.
One estimate put the cost of uncompensated care for 2004 at $41 billion, of which $34.6 billion was funded through a patchwork of government programs. Over half of all government reimbursement for uncompensated care comes from the federal government; most of that is provided through Medicare
and Medicaid
. These federal funds are a primary source of support for health care providers that serve the uninsured. Increasing demand for free and low-cost health care services by uninsured patients and Medicaid
beneficiaries is, along with increased competition, placing a growing financial strain on safety-net health care providers. Some safety-net providers are responding by trying to limit their charity care exposure and attract more paying customers.
has a program to provide reimbursements to hospitals and other health-care institutions which provide uncompensated or undercompensated health care to patients lacking private health insurance whose income falls below a certain amount but is too high to qualify them for Medicaid
and are not old enough to be eligible for Medicare
(New Jersey's situation is somewhat unique among American
states in that the state has no county or municipal hospitals).
The scheme provides free health care to uninsured state residents whose income is up to 200% of the federally designated poverty line, and provides discounts which gradually phase out at incomes between 200% and 300% of the poverty line; the patient's liquid assets (not including the patient's home and one automobile) must not exceed $7,500. Also, the maximum any individual qualifying for aid under the aforementioned criteria can be liable for in a single year is 30% of that patient's gross income for that year. A special fund was designed to compensate the health-care provider—which may have furnished either inpatient or outpatient services—for the applicable difference in cost. However, New Jersey hospitals are reimbursed for charity care at below their cost to provide these services, which helps account for the fact that in the past two years, nine hospitals have closed in the state and six others have filed for bankruptcy, according to the New Jersey Hospital Association.
Some private health-care providers in other states—particularly those that are operated on a nonprofit basis (often by religious entities)—also provide free and/or low-cost health care to uninsured patients, using income thresholds similar to those observed statewide in New Jersey; but state laws vary widely as to how much, if any, reimbursement (usually in the form of tax credits) the institution receives for so doing (and in only one other state besides New Jersey—Washington—does an outright mandate exist to provide charity care). Perhaps the most famous example of such an institution was the Charity Hospital of New Orleans, founded in 1732 and now run by the Medical Center of Louisiana
, now closed due to damage from Hurricane Katrina
.
In 2007 the community hospitals in Washington State agreed to uniform standards for providing free and reduced cost care to low-income individuals. The new standards were less generous than existing practice for four out of ten community hospitals, but is stronger than existing state law. Care is free for families with incomes below the federal poverty level. Between one and two times the federal poverty level patients may buy care at cost; between two and three times the federal poverty level uninsured patients are charged no more than what an average insured patient would pay.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, charity care (also known as uncompensated care) is health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
provided for free or at reduced prices to low income patients. The percentage of doctor
Physician
A physician is a health care provider who practices the profession of medicine, which is concerned with promoting, maintaining or restoring human health through the study, diagnosis, and treatment of disease, injury and other physical and mental impairments...
s providing charity care dropped from 76% in 1996-97 to 68% in 2004-2005. Potential reasons for the decline include changes in physician practice patterns and increasing financial pressures. In 2006, Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
investigators found that many hospital
Hospital
A hospital is a health care institution providing patient treatment by specialized staff and equipment. Hospitals often, but not always, provide for inpatient care or longer-term patient stays....
s did not inform patients that charity care was available. Some for-profit hospitals provided as much charity care as some non-profit hospitals. Investigators also found non-profit hospitals charging poor, uninsured
Uninsured in the United States
The number of persons without health insurance coverage in the United States is one of the primary concerns raised by advocates of health care reform. According to the United States Census Bureau, in 2009 there were 50.7 million people in the US who were without health insurance...
patients more than they did patients with health insurance
Health insurance in the United States
The term health insurance is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government...
.
One estimate put the cost of uncompensated care for 2004 at $41 billion, of which $34.6 billion was funded through a patchwork of government programs. Over half of all government reimbursement for uncompensated care comes from the federal government; most of that is provided through Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
and Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
. These federal funds are a primary source of support for health care providers that serve the uninsured. Increasing demand for free and low-cost health care services by uninsured patients and Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
beneficiaries is, along with increased competition, placing a growing financial strain on safety-net health care providers. Some safety-net providers are responding by trying to limit their charity care exposure and attract more paying customers.
State reimbursement for charity care
The state of New JerseyNew Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
has a program to provide reimbursements to hospitals and other health-care institutions which provide uncompensated or undercompensated health care to patients lacking private health insurance whose income falls below a certain amount but is too high to qualify them for Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
and are not old enough to be eligible for Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
(New Jersey's situation is somewhat unique among American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
states in that the state has no county or municipal hospitals).
The scheme provides free health care to uninsured state residents whose income is up to 200% of the federally designated poverty line, and provides discounts which gradually phase out at incomes between 200% and 300% of the poverty line; the patient's liquid assets (not including the patient's home and one automobile) must not exceed $7,500. Also, the maximum any individual qualifying for aid under the aforementioned criteria can be liable for in a single year is 30% of that patient's gross income for that year. A special fund was designed to compensate the health-care provider—which may have furnished either inpatient or outpatient services—for the applicable difference in cost. However, New Jersey hospitals are reimbursed for charity care at below their cost to provide these services, which helps account for the fact that in the past two years, nine hospitals have closed in the state and six others have filed for bankruptcy, according to the New Jersey Hospital Association.
Some private health-care providers in other states—particularly those that are operated on a nonprofit basis (often by religious entities)—also provide free and/or low-cost health care to uninsured patients, using income thresholds similar to those observed statewide in New Jersey; but state laws vary widely as to how much, if any, reimbursement (usually in the form of tax credits) the institution receives for so doing (and in only one other state besides New Jersey—Washington—does an outright mandate exist to provide charity care). Perhaps the most famous example of such an institution was the Charity Hospital of New Orleans, founded in 1732 and now run by the Medical Center of Louisiana
Medical Center of Louisiana at New Orleans
The Medical Center of Louisiana at New Orleans is the official name of two teaching hospitals in New Orleans, Louisiana. Both hospitals are part of the Louisiana State University Health Sciences Center in New Orleans, commonly referred to as the LSU Medical School in New Orleans.The two hospitals...
, now closed due to damage from Hurricane Katrina
Hurricane Katrina
Hurricane Katrina of the 2005 Atlantic hurricane season was a powerful Atlantic hurricane. It is the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the United States. Among recorded Atlantic hurricanes, it was the sixth strongest overall...
.
In 2007 the community hospitals in Washington State agreed to uniform standards for providing free and reduced cost care to low-income individuals. The new standards were less generous than existing practice for four out of ten community hospitals, but is stronger than existing state law. Care is free for families with incomes below the federal poverty level. Between one and two times the federal poverty level patients may buy care at cost; between two and three times the federal poverty level uninsured patients are charged no more than what an average insured patient would pay.
External links
- "Charity Care - New Jersey Hospital Care Payment Assistance Program" from the New Jersey Department of Health and Senior Services website (accessed June 16, 2008)
- "Charity Care in Wisconsin Hospitals" from the Wisconsin Department of Health and Family Services website (accessed June 16, 2008)