Michael Hutner

Hospital CFOs can call on community agencies to help them recover costs of uncompensated care to people who have disabilities and are homeless.


At a Glance  

Hospitals that partner with community agencies can take the following steps to obtain Medicaid and Medicare reimbursement not available otherwise:  

  • Contact agencies that assist homeless disability applicants  
  • Assess whether the hospital will recover otherwise lost costs  
  • Form and fund partnerships with community agencies that will reimburse much more than costs  

Hospitals provide costly emergency, inpatient, and outpatient care to people who experience homelessness, many of whom are disabled by physical conditions or serious mental illnesses. People who experience homelessness typically lack insurance coverage, and the cost of their hospital services is added to an already large burden of charity care. Although hospitals assist uninsured patients who have disabilities to obtain supplemental security income (SSI) benefits, these efforts often are not successful with people who experience homelessness.

These applicants are especially difficult for hospitals to assist. Frequently, they lack or cannot provide a history of treatment, or even current medical care that is the basis for documenting a claim of disability. In addition, they have no fixed address and no telephone, so it is difficult for hospitals to keep in contact with them throughout the application process.

As a result, patient financial services counselors or contractors at hospitals often spend considerable time initiating an application for a patient, only to find the person does not maintain contact with them after discharge. Or the person does not appear for an evaluation that a state disability determination services office, under contract with the Social Security Administration (SSA), has scheduled for them. After a second try, the application is often denied because of "noncompliance."

Community agencies are skilled in obtaining benefits for clients who experience homelessness and have disabilities. Many case managers receive training through SSI/Social Security Disability Insurance (SSDI) Outreach, Access, and Recovery (SOAR), a federal initiative funded by the Substance Abuse and Mental Health Services Administration of the U.S. Department of Health and Human Services. SOAR encourages local agencies to seek closer communication and coordination with SSA offices and state disability determination service offices with which they contract.

Assisting applicants is labor-intensive and costly for community agencies. To maintain this intensive assistance, homelessness organizations need funding and have proposed partnerships with area hospitals. The requested funding enables both proposed partners to accomplish mutual objectives.

Is a Partnership Right for a Hospital?

With little effort or risk, hospital financial managers can get an advance idea of whether to consider collaboration with a community agency. The question, simply, is whether costs to be recovered through Medicaid will be greater than the cost, time, and effort to create, fund, and maintain the partnership, and whether these efforts will recover more than any alternative strategy (e.g., Medicaid disproportionate share hospital program).

In evaluating possible recovery, financial managers should include amounts for patients the community agency contacts through its own outreach efforts and referrals from other community agencies, not just referrals from the hospital. Expected recovery should include amounts recovered not only from Medicaid, but also from Medicare, which takes effect after a waiting period. Although relatively few people who experience homelessness become eligible for SSDI and accompanying, but delayed, Medicare coverage, payments from Medicare are higher than those from Medicaid.

A hospital finance office can estimate amounts to be recovered by projecting uncompensated costs by persons who experience homelessness and have disabilities and have received services in inpatient, outpatient, and emergency departments during a recent 12-month period. A next step would be to estimate the Medicaid funds recouped, if 70 percent of these patients were to obtain Medicaid coverage. The method is straightforward but often difficult, because hospitals may not have accurate information about whether a person is experiencing homelessness or facing an imminent risk of homelessness. However, a best guess will often be sufficient.

Another method would be for the community agency to estimate any reimbursement the hospital has received for patients whom the agency had helped to obtain eligibility for coverage prior to any collaboration. The agency would identify each recipient who used hospital services, the type of service, date of service, cost of service, and whether resulting coverage was Medicaid or Medicare. The agency would obtain from the hospital the likely percentage of costs Medicaid and Medicare cover and use that information to estimate costs the hospital recovered for each patient. Providing these estimates to the hospital may be enough for the hospital to determine if the payments have been significant.

The estimate would be more accurate if the community agency were able to provide the hospital with the name, Social Security number, date application was filed, date of eligibility for SSI or SSDI, and date any Medicaid or Medicare coverage had begun for each recipient they had assisted. To provide this information, the community agency would need a release signed by the recipient. That release would be easy to obtain for current and future applicants, but more difficult for clients whom the community agency had previously helped.

To get started, a hospital can enter into a brief informal pilot collaboration with one or more community agencies that have proposed collaboration, or which the hospital has contacted. These brief tests will help the hospital decide further if cost recovery is likely to be significant and whether specific community agencies would be suitable partners.

Assessing a Partnership

Healthcare financial managers can use the following criteria to assess whether collaboration with any specific community agency will likely be successful. Does the community agency:

  • Obtain eligibility for coverage for a significant number of applicants and achieve a success rate greater than 70 percent?
  • Provide or link to organizations that provide street outreach, case management, primary and behavioral health services, housing, and employment assistance to applicants?
  • Provide services in a geographic area that overlaps sufficiently with that of the hospital and to patients that have primary illnesses that the hospital treats?
  • Have case managers or benefits specialists that dedicate their time substantially or completely to assisting applicants? The process is complex and takes experience following training to become expert.

The first criterion, a track record of success, is the most helpful. It indicates that the community agency gives priority to assisting applicants, has the needed knowledge and skill, and, as previously mentioned, may already have enabled the hospital to recover costs.

To determine the success rate obtained by a prospective community partner, financial managers should ask three questions: How many SSI/SSDI applicants who experienced homelessness or risk of imminent homelessness, not counting appeals and persons who were not able to maintain contact, were assisted during the past 12-month period? How many of these applications were approved? And how many were denied? Then, to calculate the success rate, the number of approvals should be divided by the number of applications.

In the absence of a community agency that has such above-mentioned experience, a hospital may want to consider collaboration with agencies that have not yet taken on that role. The most likely partners are agencies that offer street outreach and case management. Staff go outdoors, engage people experiencing homelessness, and provide or link them to needed services and housing. These community agencies may include community health centers, health care for the homeless programs, and community mental health centers. They may not include other agencies that might appear to be obvious choices, such as shelters, if the shelter staff confine their efforts to services that are mostly facility-based.

Funding Arrangements and Level

Hospitals that collaborate with community agencies often fund these agencies to hire staff. This arrangement is different from compensation to private contractors. Hospitals typically compensate a private firm with a percentage of the funds it recovers as an incentive to the firm to obtain high eligibility rates.(This approach happens also to provide a disincentive for completing applications that are time-consuming but beneficial for the hospital.)

Community agencies are accustomed to up-front funding, rather than a percentage of amounts recovered. Typically, they are unable to hire needed staff for a usual 12-month period without secure funding. A community agency, therefore, usually requests a specific up-front level of funding that covers salaries of added staff, but not always overhead and other expenses, if the agency is able to pay those costs from other sources.

Of course, an even better collaboration would be for a hospital considering a partnership with a community agency to join with other hospitals and healthcare providers that serve the same patients. Together, they could share the costs of funding one or more community agencies to assist these patients, and each healthcare provider would recover reimbursement for any services to assisted patients who became eligible for SSI/SSDI. Even providers who served the same assisted patients, but decided not to join a partnership, would recover costs. In turn, they might be willing to track and report to the partnership reimbursements they recover. The partners would then be able to document the full community impact of their funded assistance to applicants.

In any partnership, the participating hospital, rather than the community agency should probably retain responsibility for billing Medicaid and Medicare. The billing role is outside the usual expertise of a community agency. Also, a hospital may be reluctant to provide access to its financial information to a partner agency rather than a contractor.

Bringing Hospital Departments and Contractors into the Partnership

The hospital finance office should clarify that any new partnership will be contributing to, not replacing, current efforts to enroll applicants. The new partnership will focus only on people who experience homelessness or face an imminent risk of homelessness. It will help people to obtain SSI and Medicaid resulting from SSI coverage, rather than help applicants without SSI to apply directly for Medicaid. It will also assist the relatively few people eligible for SSDI even though these people will not be covered by Medicare until a later date. The partnership efforts will help patients from an area served by its network of homelessness services that often is smaller than an area that a hospital and its contractor serve.

There is another difference between internal or contracted efforts and efforts with community agencies. The community agencies will continue to serve many patients not referred by the hospital, but contacted by their own outreach efforts or referred by other community agencies serving people who experience homelessness.

Coordinating the role of the community agency with that of a contractor requires clarity regarding patients each will assist and procedures used to refer patients to the other. For example, the contractor may begin to help applicants whose homelessness was not immediately evident. When learning the patient is considered homeless, the contractor should notify the community agency. The community agency, in turn, should notify the contractor when a person thought to be experiencing homelessness turns out to be housed. The contractor may have spent a lot of time assisting applicants who did not maintain contact. If the community partner later obtains eligibility for these same patients, the hospital may also provide payment to the contractor for the extent of its role.

Other hospital constituencies to bring into the partnership are physicians, nurses, and social workers. Physicians can provide more complete notes wherever feasible, not only on diagnoses, but also on current extent of impairment and its impact on ability to function in a job setting. Nurses and social workers can also provide observations regarding functioning and request that a physician also sign these notes so that SSA can consider these notes to be medical evidence.

Implementing the Collaboration

Hospitals should alert a community partner when a patient who appears to be experiencing homelessness seeks hospital services. But hospital admission offices cannot always identify people who experience homelessness or are likely to be without housing in the immediate future. For example, people who experience homelessness may provide the address of a shelter or social service agency or the temporary address of a friend. Other people who have housing may not disclose their address to avoid payment of hospital expenses.

Important in identifying potential applicants who may have been missed are hospital staff in social services and nursing. With the patient's consent, these staff can contact a case manager at the collaborating community agency. In some cases, a case manager from the community agency may be located in emergency departments and outpatient facilities of the hospital at scheduled hours, for specific appointments, or on call. Hospital staff can make special efforts to refer to case managers frequent users who may meet criteria for eligibility.

Reporting Results: Taking Extra Credit for Good Deeds

Both the hospital and the community center should take credit for monies recovered. The hospital through its finance office can take credit for these efforts that decrease losses, thereby conserving the resources of state and local government. Assisting SSI/SSDI applicants who are homeless to obtain health coverage also:

  • Improves the health of people who then need less care
  • Changes the utilization of health services from more costly emergency care to less costly routine care
  • Covers much of the cost of that future care

Additionally, not-for-profit hospitals can fulfill part of their requirement for not-for-profit status by claiming that any funding to a community partner is a community benefit.

The public impact of assisting these applicants may be even greater because it appears that subsistence disability payments enable the recipient to pay at least partial rent for publicly supported housing and that, in turn, increases the chances that a person will be able to obtain such housing. By funding an effort that helps people who experience chronic homelessness into housing, the healthcare provider helps the people who are the most visible and the sickest, and who use the most public resources get off the streets. Providing or linking patients to housing, especially supportive housing-housing combined with the availability of services-is important. Studies have indicated that supportive housing decreases use of emergency health services. That would be a benefit, of course, even if future visits would be reimbursed by Medicaid.

The community partner and finance office can each collect data that together will tell the story of recovered costs, outcomes, and public benefit. The hospital will typically compile data on costs recovered from Medicaid and Medicare during a 12-month period and separately, projected for these same patients in the future. The community agency will obtain data on pre-eligibility characteristics of applicants and any change in the following outcomes: housing status, shelter use, criminal justice involvement, employment, and connection to any mental health or substance abuse services.

Even if a hospital decides not to pursue collaboration, it can benefit from efforts of community agencies to assist applicants. It can ask and expect that a community agency obtain a waiver from an applicant that will allow the agency to inform area health providers when the applicant becomes eligible for SSI/SSDI. Doing so will alert a hospital to seek any retroactive and future compensation if these recipients become patients. Similar to a previous suggestion, it would be helpful if the hospital were to inform the community agency periodically of any amounts recovered. The agency could then cite such recovery in its applications for foundation funding.

Example of Successful Collaboration

Joseph Ruark, assistant vice president of patient financial services for St. Elizabeth Healthcare, which operates hospitals in Northern Kentucky, reported recently results from a partnership with Welcome House, a community agency in Covington, Ky. In this partnership, Welcome House has assisted patients who experience homelessness and have disabilities to apply for Social Security disability benefits and health coverage.

Welcome House has assisted 114 patients with obtaining SSI (and Medicaid) or SSDI (and Medicare) since the program's inception in December 2006 through April 2010. During that period, St. Elizabeth Healthcare recovered $550,000 in Medicaid and Medicare payments for hospital care to these patients that would otherwise have gone unreimbursed. Welcome House was able to assist these patients by hiring case managers through grant funds from St. Elizabeth Healthcare totaling $162,000.

"We could not be more delighted," Ruark says. "We are able to improve the health of our patients and help end homelessness in Northern Kentucky. And, at the same time, we are able to help our bottom line and have more opportunity to use our charity dollars to help other uninsured patients."

One surprise was that most of the patients helped by Welcome House had been referred by Welcome House staff in their work with other component programs of the agency or from other community sources. Another surprise was that a significant portion of the costs recovered for the hospital were from Medicare reimbursements from care to patients whom Welcome House had helped obtain SSDI at least one year before their hospitalization or outpatient service.


Michael Hutner, PhD, is a consultant, New Haven, Conn. (mikehutner@aol.com).

Publication Date: Monday, November 01, 2010

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