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April 8, 2024

Report: Financial assistance to patients dips at some CT hospitals

CLOE POISSON / CTMIRROR.ORG Saint Francis Hospital main entrance on Woodland Street in Hartford.

Hospitals with non-profit status receive major financial benefits from the federal and state governments, including relief from income, sales and property taxes. In return, they must provide what’s known as “community benefit.” 

But a new report raises questions about whether some hospitals are providing enough.

Community benefits can come in several forms, including providing free and discounted care, accepting patients on Medicaid, conducting research and training health professionals. But it can also include spending on community services that address social determinants of health, like housing and food access.

According to the draft report published this week by the Office of Health Strategy, Connecticut’s non-profit hospital community benefit spending increased slightly from $1.6 billion in 2017 to $1.8 billion in 2022. However, the amount that non-profit hospitals spent on community benefits as a share of total expenses dropped from 15.8% to 11.8%.

When asked about the figures, Nicole Rall, a spokesperson for the Connecticut Hospital Association, said that hospitals have increased community benefit spending at a time when their costs have soared. 

“The real story here is that hospitals grew their investments even as they faced unprecedented cost growth and during years when many hospitals had negative operating margins,” said Rall in emailed statements. 

Tiffany Donelson, president and CEO of Connecticut Health Foundation, said that while she finds the overall numbers disheartening, the report marks the most detailed insight into community benefit spending in the state. 

“We’ve never had an opportunity to really look at and to think about community benefit dollars in this holistic way,” she said. [The Connecticut Health Foundation is a funder of The Connecticut Mirror.]

Among the key findings, the study’s authors noted that community benefit reporting lacks transparency and standardization, making it difficult to provide consistently accurate comparisons across facilities.

Charity care

The report revealed that free and discounted care provided by hospitals to income-eligible patients — known as charity care — decreased by 25%, or nearly $90 million, from $343 million in 2017 to $256 million in 2022. 

“The decline in charity care is notable as it is the most historic community benefit, and a direct benefit people obtain from nonprofit hospitals that are organized and operated for a charitable purpose,” wrote the report’s authors. While conducting research or providing training programs for health professionals can absolutely provide indirect benefits, the impact of charity care is more concrete for patients. 

“Medical bills are inundating over 280,000 Connecticut residents. Charity care is that bridge, that support, because our health care system is one of the most expensive in the world,” said Kally Moquete, senior manager of policy at Health Equity Solutions.

There are multiple potential explanations for the decline. The report’s authors note that federal public health emergency funding, expanded COVID-era Medicaid eligibility and a decrease in hospital utilization during the pandemic all could have contributed to a decreased demand for charity care dollars. The CHA spokesperson also noted that enrollment in the state’s exchange has continued to grow. 

But the report also noted that the decrease in charity care has been accompanied by an increase in bad debt, which represents “the services for which a tax-exempt hospital anticipated but did not receive payment” and can result in medical debt for individuals. Even if hospitals write off bad debt, they can still sell it to collections agencies or report it to credit bureaus. 

Between 2016 and 2022, about $100 million of bad debt was attributable to individuals who would have qualified for charity care. But it’s unknown why those individuals didn’t receive financial assistance. For example, the services they used may have been exempt from the hospital’s charity care policy, or the patients may have not applied.

Rall, the spokesperson with CHA, attributes the increase in bad debt to the proliferation of high-deductible plans that leave patients underinsured. She stated the problem should be addressed by “tackling misleading and insufficient insurance coverage.”

Elisa Neira-Hamada, the senior director of health equity at OHS, said that ensuring access to charity care for those who qualify can help alleviate devastating financial pressures of receiving medical care, which disproportionately impacts Black and Latino, low-income, disabled and uninsured residents. 

“For many residents, understanding how to apply for assistance can be a challenge, let alone during a time when they are sick and may need emergency care. Strengthening access to financial assistance can directly impact health outcomes and eliminate significant financial burdens,” said Neira-Hamada in emailed comments.

In 2022, Yale New Haven Health spent the most on charity care among large Connecticut hospital systems, both in terms of total dollars and as a percentage of expenses. But the system also saw the most drastic decrease in charity care spending when compared to 2021, with a nearly $50 million reduction.

"We are proud to have the most generous financial assistance policies in the state," said Mark D'Antonio, a spokesperson for Yale New Haven Health. "The exact amount of our charity care spending varies year over year due to external factors such as volume and demand, but we consistently boast multiple programs designed to provide low-income patients and families with the resources and financial assistance they may need."

Trinity Health of New England spent the least on charity care as a percent of total expenses when comparing the major health systems. The system’s eligibility threshold — 200% of the Federal Poverty Level — for free care is the lowest of the non-profit hospitals in the state and equal to the eligibility standard at Waterbury, one of the state’s for-profit hospitals. Middlesex Hospital, which is independent, also has an eligibility threshold of 200% of FPL. 

For discounted care, nearly all the state’s non-profit hospitals have an eligibility threshold equal to the state’s for-profit hospitals at 400% of FPL. The policy at Day Kimball Hospital in Putnam for discounted care is less generous than the for-profit hospitals, while Middlesex, Connecticut Children’s and Yale New Haven Health system have more generous policies. 

Trinity Health of New England spokesperson Kaitlin Rocheleau said that the system takes its commitment to the community seriously and holds themselves accountable through transparent financial reporting.

"Our care also goes beyond hospital beds, and our reach extends to provide housing and other social services needed to create healthy communities," stated Rocheleau in emailed comments. The system runs a program called Transforming Communities Initiative, which provides $350,000 annually for four years to each of its Connecticut hospitals to address needs identified in their community needs assessments. The system also provides grant funding to community programs and extended a $5 million low-interest loan to the Local Initiative Support Collaborative.

Differences in policies

Financial assistance policies aren’t uniform across hospitals, which can make understanding eligibility difficult for consumers. 

Each organization can determine income eligibility thresholds and, in certain instances, which services to cover. OHS found that, in some cases, the services covered differed even within a single hospital system. 

Most notably, Hartford HealthCare’s financial assistance policy excludes emergency physician services at three of its hospitals: MidState Medical Center, Windham Memorial and the Hospital of Central Connecticut Bradley Memorial campus in Southington.

“In effect, Hartford HealthCare has two Financial Assistance Policies, one for those seeking emergency care at four of the system’s hospitals, and another for those seeking emergency care at the system's other three hospitals,” noted the authors.

Hartford HealthCare also excludes from charity care eligibility primary care physician services provided outside the hospital setting, including at physician offices and via telehealth. The report’s authors noted that “excluding primary care services at an office is not the standard across the state.” Other health systems, including Yale New Haven Health, Trinity and Nuvance, exclude services provided by specific physicians. 

Hartford HealthCare declined to comment directly and pointed to the Connecticut Hospital Association for additional information.

When asked about why financial assistance policies differ across hospitals and whether standardization would benefit patients, the CHA spokesperson said that Connecticut hospitals “have strong financial assistance policies and nearly all have extended well beyond statutory requirements.”

Other findings

The largest category within community benefit spending was the unreimbursed costs of Medicaid, totaling $1 billion, or over 60% of the total spending. Both advocates and CHA agree that this shows the urgent need to increase Medicaid reimbursement rates to providers.

“This is demonstrating a break in our system,” said Donelson, the Connecticut Health Foundation CEO. “We aren’t reimbursing at the rates that we should as a state. In addition, that is giving these systems rationale to not invest in the things that the community is asking for.”

The authors’ final recommendations included expanding community benefit reporting requirements to include the hospitals’ calculations, which could help OHS delve into causes for increases and decreases in spending. The agency also recommended expanding reporting requirements to include investments made in local health effects and community-based organizations. 

The report also lays out considerations for how Connecticut can explore setting its own standards to address the lack of consistency in community benefits policies and reporting, including an example from Oregon where the state passed a law standardizing income limits for free care. 

A bill currently under consideration by the legislature seeks to standardize certain elements of charity care, including implementing a universal financial assistance application and requiring hospitals to annually report the number of patients requesting financial assistance.

The Office of Health Strategy is accepting comments on the report through April 30. 

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