While many health systems nervously await an Internal Revenue Service decision stemming from the Affordable Care Act about how they must manage financial assistance and charity care, leaders in the North Shore-Long Island Jewish Health System in New York are breathing a little easier.
The 16-hospital system provided $193 million in patient-requested charity care in 2012, more than a tenfold increase from $17 million in 2005. The increase came from expanded eligibility levels, new uses of data, new processes — and a new attitude.
After state regulations enacted in 2007 mandated that financial assistance be extended to all patients at or below 300 percent of the federal poverty level, health system leaders chose to increase its own threshold to 500 percent of the poverty level. "We believe that offering medical care to financially challenged patients is part of our mission and obligation to the communities we serve," says Bob LeWinter, vice president of Regional Claims Recovery Service, a division of North Shore-LIJ.
But, as most hospital executives know, getting eligible patients to apply for assistance is not easy. LeWinter says revenue-cycle leaders must use the same approach to giving charity care as they do to increasing revenue.
"The first thing is that you have to embrace the concept," he says. "And then you just apply the same business rules that you would to increase your revenue: What automation can I introduce into it? And how can I standardize the process to do this as efficiently as possible?"
Among other things, North Shore-LIJ developed new processes to make it easier for patients to apply for assistance. Starting in 2008, it engaged a credit bureau to provide projected patient income in lieu of the patient's having to submit wage verification. This allowed patients to apply for assistance through a telephone call with a customer financial representative.
Many patients, however, do not contact the health system to seek financial help. Thus, in 2010, the credit bureau analyzed more than 50,000 patient accounts to learn that when a hospital bill exceeds 4 percent of a family's income, it becomes unmanageable. North Shore-LIJ uses that tipping point to identify patients who likely are eligible for assistance or charity care and to proactively reach out to them with an offer to help. Approval still is based on the patient's FPL level.
By making the application process easier for patients, North Shore-LIJ has reduced its bad-debt levels — and actually collects more money from some patients than it would have under its previous process. Of all the patients who receive charity care from the system, patients are responsible for about 7.5 percent of total charges. While a $1,000 bill is overwhelming to a low-income patient, reducing that to $75 makes it manageable.
"When I say, 'If you send me $75, this bill is done and taken care of,' the patient says, 'I have pride, I got the treatment, I'll pay the $75,' " LeWinter says. "In fact, we have recovered a lot of the reduced patient responsibility, which is money we maybe never would have seen before this."