Carole J. Bolster

The number of uninsured patients is growing. What can you do to help your organization address this issue?


At a Glance 

Maintaining the healthcare organization's charitable mission to the community is best served by having formal policies in place. Must-haves include: 

  • A written charity care policy tailored to the organization 
  • Financial assistance policies 
  • Processes for identifying and communicating with patients who may need financial assistance 
  • Formal discounting and collection policies and practices that take into account every patient's ability to pay 


A patient shows up at your hospital for a scheduled procedure. He tells the admitting clerk that he just lost his job and has no health insurance.

A patient calls your hospital to schedule surgery. The scheduling clerk gets the impression he may lack the means to pay for his care.

A self-pay patient calls your hospital's administrator, angrily claiming that she was overcharged for recent hospital services. She claims that a friend was recently in another hospital for the "same thing" and that her friend's insurance company paid "way less."

What do you do?

Perhaps one of the greatest challenges facing healthcare financial executives today is providing healthcare services to the growing number of uninsured and underinsured patients while maintaining fiscal responsibility. Hospitals and health systems are striving to meet their charitable mission to the community in the face of rising costs and increasingly complex regulations.

By now, everyone has seen the statistics. The U.S. Census Bureau reports the number of uninsured in 2003 totaled 45 million people, or 15.6 percent of the nation's population. Struggling with high costs, employers are raising employees' share of healthcare costs or dropping coverage altogether. Meanwhile, the amount of uncompensated care provided by hospitals continues to grow. According to the American Hospital Association, U.S. hospitals provided $24.9 billion in uncompensated care in 2003, up 13 percent since 2000.

What is the best way to identify and reach out to people who are uninsured or underinsured? Early in the process, providers should be identifying patients who may need financial assistance and providing them with financial counseling, communicating information to them in an easy-to-understand manner, and implementing discounting and collections policies and practices that are reasonable and fair.

Put It in Writing

Hospitals and health systems should have formal, written charity care policies. Some state hospital associations are making available guidance on how to assist uninsured and underinsured patients.

The California Healthcare Association's board of trustees, for instance, adopted California Hospital Billing and Collection Practices: Voluntary Principles and Guidelines for Assisting Low-Income Uninsured Patients in February 2004. The CHA urges its member hospitals to adopt the principles and guidelines in the document. The guidelines address financial assistance policies for low-income uninsured patients, communication of financial assistance policies with patients and the public, and billing and collections practices. The guidelines call for every hospital to maintain understandable, written financial assistance policies that state the eligibility criteria and the process the hospital uses to determine a patient's eligibility.

The CHA guidelines recommend that hospitals have written policies governing when and under whose authority patient debt is advanced for collection and define the standards and scope of practices to be used by outside collection agencies. The guidelines also suggest that patient bills include a statement indicating that patients who meet certain income requirements may be eligible for a government-sponsored program or for financial assistance from the hospital and provide the name and telephone number of a hospital employee or office to call for information about the hospital's financial assistance policies and how to apply for such assistance.

The Hospital & Healthsystem Association of Pennsylvania published its Charity Care and Financial Aid Guidelines for Pennsylvania Hospitals in July 2004. The document discusses overall principles, federal tax-exemption requirements, eligibility for financial aid, financial aid policies, accountability and advocacy, and collections policies. It also includes a model patient notice of financial aid.

The HAP guidelines recommend that hospitals have a charity care policy that addresses:

  • Patient eligibility for other public or private coverage
  • Income eligibility threshold based on family size
  • Consideration of other resources available to a patient or responsible party
  • Patient or responsible party employment status and earning capacity
  • Other financial obligations of the patient or responsible party
  • Other sources of funds available to the hospital, such as endowments or donations specified for charity care

Communicate, Communicate, Communicate

The success of any financial assistance program depends on getting the word out to those who need it. Advocate Health Care, based in Oak Brook, Ill., has posted a description of its charity care program and a summary of its charity care guidelines on its web site. The eight-hospital, not-for-profit health system uses a variety of methods to notify patients about whom to contact regarding financial assistance. Multilingual signs are posted in hospital registration areas. Phone and mail are used to contact patients who may be eligible for financial assistance and charity care consideration. Billing statements include information about the availability of financial assistance and provide a phone number to call. Advocate offers bilingual phone options that enable patients to reach the right party to discuss financial assistance. The health system also provides a brochure in English and Spanish explaining the availability of charity care. Financial counselors are available to help patients determine whether they qualify for Advocate's own financial assistance program or other programs, such as Medicaid, Medicare, or KidCare.

According to Terry McCarthy, Advocate's director of patient accounts, the health system has created a new patient database for tracking charity assistance applications, which includes the patient's name, account balances, reason for needing a charity care application (for example, patient is uninsured or Medicaid application was denied), date the form was given to the patient, whether charity assistance was approved, and amount of the discount. The software can generate patient applications for charity assistance, track the progress of pending applications, and report on the population.

In addition, Advocate is implementing new software for use during patient registration at three sites and will eventually roll out the technology to all of its sites. The technology can identify financial assistance programs for which a patient might be eligible and produce the necessary application specific to each program (Medicaid application, Advocate charity application). The software fills in most of the necessary information on the form from the registration system. The patients need only to fill in a small amount of additional information and return the form to the hospital. If patients do not return the form to the hospital within two weeks, the patient accounting system prints an automatic reminder, which is mailed to them. Once patients who need financial assistance have been identified, Advocate reclassifies their accounts from self-pay to Medicaid or charity assistance pending so they will not be sent a bill.

Another strategy Advocate uses to assist uninsured and underinsured patients is to retain precollect vendors. These vendors have more sophisticated phone systems than the hospital has, according to McCarthy. Advocate trains the vendors on how its charity application process operates. The vendors use collection letters that have been approved by Advocate and include information about the availability of charity assistance. The vendors send a letter and application to patients identified as potentially eligible for charity assistance and provide follow-up when necessary. When vendors receive completed applications, they forward them to the hospital. The account then goes to Advocate's charity care committee for consideration. The committee includes hospital representation from finance, social services, religious services, patient relations, ethics, legal, and medical staff as well as community representation.

Provide Counseling

Having a good charity care policy-one that is unique to the facility-and applying it consistently is crucial, says Maria Persons, director of patient financial services at Tucson Medical Center, Tucson, Ariz. In addition, by providing financial counseling, hospitals and health systems can help uninsured and underinsured patients find funding sources to assist with their medical bills and reduce the organization's uncollectible debt. Financial counselors can help patients determine whether they are eligible for the organization's own financial assistance program or a government-sponsored program, such as Medicaid.

TMC, part of TMC Healthcare, recently enhanced the role of its financial counselors. TMC places considerable emphasis on helping the uninsured and the underinsured, Persons noted. Before mid-2003, TMC had two financial counselors who were based in the inpatient admitting areas. The counselors focused only on pure self-pay accounts. After assessing where the greatest need for counseling was, TMC increased the number of financial counselors to six and decentralized them to nontraditional areas. The financial counselors now work out of the main inpatient admitting, emergency department, preadmission testing, same-day surgery, and centralized scheduling areas.

The financial counselors identify patients who need assistance early in the process, help patients fill out financial assistance forms, and help make payment arrangements. They can build a screen into their information system to help pinpoint patients who are going to need help. The counselors' duties also include collecting copayments up front and identifying nontraditional funding sources. Because of these changes, TMC's up-front cash collections have increased 29 percent and charity patient identification at the point of service has increased 32 percent, while uncollectible bad debt has dropped 10 percent and the cost of using outside services has dropped 52 percent. Having financial counselors helps identify patients who need financial assistance up front, before accounts are sent to collection agencies, Persons says.

Make It Patient-Friendly

Patient communications should be easy to understand. The PATIENT FRIENDLY BILLING® project focuses on helping healthcare industry leaders create a friendlier, patient-focused healthcare billing and collection process. A Patient Friendly Billing report released in early 2005, Hospitals Share Insights to Improve Financial Policies for Uninsured and Underinsured Patients, examines issues surrounding discounting and collection policies and practices for patients with limited ability to pay. The report cites three principles that were used to guide the discussion:

  • Patients and their families have a responsibility to help hospitals qualify them for the appropriate level or type of financial assistance given their circumstances.
  • To ensure the continued ability of hospitals to serve all patients, hospitals have a responsibility to develop and administer financial assistance policies fairly. Hospitals also have a responsibility to all patients to seek payment from patients who are able to pay.
  • When developing more patient-friendly policies and procedures, hospitals may want to seek input from their communities.

Hospitals are challenged to identify patients who cannot pay for their care and establish payment expectations for those who can pay. To better serve patients, the report notes, many hospitals are evaluating their discounting and collection policies and practices for services to the uninsured and underinsured. The report poses and discusses seven key questions for hospitals to consider when evaluating policies and practices related to discounting and collecting for care provided to these patients:

  • Who qualifies for discounted or free care?
  • What services are discounted?
  • What discount levels are offered?
  • How are policies communicated?
  • How are unpaid patient accounts resolved?
  • What structures and systems are in place to implement and administer policies effectively?
  • What is the relevant legal and regulatory context?

The report also discusses lessons learned by hospitals that have recently revised their policies and then suggests actions hospitals can consider in response to the growing challenges.

What about Vendors?

William A. Sarraille, Esq., a partner in the law firm Sidley Austin Brown & Wood, LLP, Washington, D.C., believes providers that outsource some or all of their billing and collections activities should ensure that their vendors adhere to the organization's charity care policies. He advises organizations to find out:

  • What are the vendor's requirements for its employees?
  • How does the vendor monitor its employees and how frequently?
  • Does the vendor have written instructions and standard operating procedures? What is the healthcare organization's control over them?
  • Does the vendor have a compliance program?

Pulling Together

Dealing with medical problems is stressful. Worrying about how to pay for medical care only adds to the stress. Patients' health problems are compounded by their financial problems. Healthcare financial executives can implement various strategies to ensure that their billing and collections policies and practices for uninsured and underinsured patients are fair and reasonable both for the patients and for the hospital or health system.


Carole J. Bolster is a senior editor in HFMA's Westchester, Ill., office.

Publication Date: Tuesday, March 01, 2005

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