NC nonprofit hospitals under scrutiny for billing millions to poor patients in lieu of providing charity care  

A new report by the North Carolina State Health Plan and the National Academy for State Health Policy found North Carolina nonprofit hospitals billed nearly $150 million to poor patients who should have qualified for charity care.

State Treasurer Dale Folwell joined by a bipartisan group of legislators Wednesday expressed dismay at the lack of accountability in how charity care is awarded.

Under the current system, unless a patient qualifies for charity care, hospitals attempt to collect any outstanding balance. Patients with limited means to pay often find themselves facing the threat of legal action, damage to their credit, or pressure to open medical credit cards that charge interest.

“Not-for-profit hospitals receive tax exemption for providing community benefits, but there is a serious lack of transparency,” said Marilyn Bartlett, a C.P.A. with the National Academy of State Health Policy who helped conduct the study. “Sometimes the information was not available and there’s no way to verify accuracy.”

“There was a great deal of billing and assigning bad debt to patients who really should have been charity care,” said Dr. Vivian Ho, an expert in health economics at Rice University who peer reviewed the study.

“That is a pattern that seems to be occurring across all levels of nonprofit hospitals – ones that earning high profits on North Carolina, one that are large, ones that are small,” said Ho.

The numbers presented Wednesday are thought to be an underestimate because only 16% of state  hospitals provided reliable data.

But the analysts calculate  North Carolina nonprofit hospitals should have provided an average 11.9% to 28.7% of their bad debt as charity care in FY 2019.

Sen. Jim Burgin (R-Harnett) said the report was not intended to attack hospital employees who have been under tremendous strain during the pandemic.

“A not-for-profit is really a different animal. We the public are the stockholders of a not-for-profit. We give them tax-exempt status on their income on a lot of their taxes. They recover sales tax back. And they don’t pay property taxes,” explained Burgin.

The Harnett County Republican said he was distressed to learn that some hospitals steer their patients toward plastic to payoff their bill.

According to the report, Atrium Health Wake Forest Baptist, UNC Health, Cone Health, and AccessOne Health encouraged patients to use medical credit cards, which can charge interest up 18% after the initial promotional period.

“I hate that we are telling people who are in a bad financial state to get a credit card with a high interest rate that’s going to make their credit worse.”

Sen. Burgin said he would welcome the chance for hospitals to address the report’s findings when the joint legislative health commission meets in February and March.

Sen. Jay Chaudhuri (D-Wake) voiced his own concerns about the prospect of low-income individuals not receiving charity care if they qualified.

“Too many of our citizens confront the real issue of medical debt. That’s due to premiums and deductible for North Carolinians that are the highest in the country. But that’s also due to some hospitals, certainly not all hospitals, that aggressively pursue patients for collections for often small overdue bills.”

Chaudhuri said medical debt is the most likely kind of debt to lead North Carolinians to bankruptcy.

One in five North Carolinians currently has outstanding medical debt.

In collections on purpose

State Treasurer Folwell said after surviving a battle with COVID, he allowed his own medical bills to go into collections to try to better understand the plight of those struggling to payoff a sizeable hospital bill.

“I’m in collections on purpose.  Because I want to see exactly what a person goes through when they don’t pay their medical bill. You can’t really figure out what’s happening to the average citizen in our state until you put yourself in collections and see how you are treated,” Folwell said.

Folwell said that outstanding debt could not only damage one’s credit score but alter their upward mobility.

“When you have destruction of your credit score, it has generational consequences because it limits your access to capitol at low interest rates.”

Attacking and demonizing hospitals

The North Carolina Healthcare Association (NCHA) was quick to push back on the report saying hospitals’ charity care spending and community benefit investment activity is transparent and accountable.

NCHA faulted Treasurer Folwell for publicly demonizing the state’s hospitals at a time when their professionals were dealing with record hospitalizations due to COVID.

Here’s more from the association’s statement:

His press conference, a public relations stunt, shows how out of touch he is with what is going on today in hospitals in every part of the state as medical staff and administrators rise to each new challenge with resolve to provide safe, compassionate care to every patient. In contrast to the Treasurer’s actions attacking hospitals, hospital administrators are finding ways to help strained staff, doing tasks like cleaning floors and delivering food to patient rooms, due to workforce shortages and hospital employees calling out sick with COVID-19. As exhausted hospital teams press on with giving their all to every patient, the Treasurer is now distracting them from their work by causing them to have to take time to explain and correct his half-truths to patients, communities, and media.

Legislators at Wednesday’s press conference said legislation to address charity care accountability could be raised in this year’s short session.

The NCHA said any legislation introduced should consider how to expand coverage, how to help hospitals invest in infrastructure while retaining and expanding its workforce.