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The Impact – Expanded Charity Care Implications for Patients and Hospitals

Mike McClanahan profile by Mike McClanahan

Half of the people in Washington may qualify for discounted or even free hospital care because of recent changes to the state’s charity care law. The legislature approved House Bill 1616 earlier this year expanding charity care eligibility at acute care and psychiatric hospitals. The changes took effect July first. 

 Under the old charity care law:

Patients were eligible for free hospitals care if they fell within 100% of the Federal Poverty Level (FPL) based on their household income and number of family members. This year a family of four with a household income of $27,750 or less would qualify for free hospital care under the old law.

Patients between 101% and 200 % of the poverty line were eligible for a discount on out of pocket costs on a sliding scale.

Under the new charity care law there are two tiers of hospitals with different charity care obligations. Tier 1 applies to hospital chains with three or more locations as well as some specialty hospitals.

At Tier 1 hospitals patients within 300% of the Federal Poverty Level are eligible for free hospital care. That’s $83,250 for a family of four. For a family of three that’s just over $69,000.

Patients between 301% – 400% of the poverty line can qualify for 50% – 75% lower out of pocket costs depending on where they fall in that range.

A family of four with an income of up to $111,000 would fall within 400% of the 2022 FPL.

Tier 2 applies to all other hospitals including rural and independent facilities that may not be as financially stable.

For Tier 2 hospitals eligibility for free care is capped at 200% of the FPL or $55,500 for a family of four.

Hospital care discounts above that income level range from 50% – 75% of out of pocket costs, but stop at 300% of the poverty line.  

The expanded charity care legislation was requested by the Washington State Attorney General’s Office, which is also in charge of enforcing it. 

“Medical debt is a huge driver of homelessness and of poverty and of folks who have to file for bankruptcy. It’s just a big driver of those issues,” said Bob Ferguson, Washington State Attorney General. “The old law in Washington state, if you were a single parent and had a kid and you worked two minimum wage jobs and you worked 50 hours a week, you still were not eligible for a full write off of these out-of-pocket hospital expenses.”

The changes in charity care eligibility arrive at a time when hospitals around the state are experiencing tremendous financial strain, according to the Washington State Hospital Association.

WSHA CEO Cassie Sauer says there are hospitals in the state at risk of going under and others weighing potential service cuts.

“Hospitals really are underwater financially in a way that we haven’t seen for the hospital association for a long time. And it’s something I’ve never seen before to this degree. First of all, inflation is hitting hospitals like it hits everybody else. So the cost of PPE, the cost of supplies, medications and the cost of staff has gone up really tremendously,” said Sauer. “We’ve had a lot of staff out either because of family issues or because they’ve had COVID. So we’ve had to replace hospital staff with temporary staff at a really expensive cost. And then another really big issue for us is patients who aren’t leaving the hospital, who have completed their acute care needs. They had a heart attack or they fell and they’ve gotten stabilized, they’re in good shape, and we can’t find a place for them to go. There’s no more payment coming in for those patients, but they still receive the full level of hospital care.”

Sauer said patients awaiting discharge to long-term or psychiatric care facilities often remain in acute care hospitals for months longer than they need to be.

“I think the average is probably in the 100 to 120 days in our state,” said Sauer.

Watch the full interview here:

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