The Texas legislative session is in full swing. With topics like school choice, fixing the electrical grid, and AI regulations will rightly be in the spotlight, Texas lawmakers should prioritize the widespread problem of non-profit hospitals not living up to their charitable mission.
A report published last December by the Texas Health and Human Service Commission (HHSC) made the case that the mechanisms designed to protect uninsured and low-income patients from being wrongfully sent to debt collectors are failing. Texas lawmakers should review the report’s findings to assure that Texans are not being wrongfully denied or barred from accessing non-profit hospital charity care.
Non-profit hospitals are required by state and federal law to create a “financial assistance policy.” These financial assistance policies are colloquially referred to as “charity care.” Uninsured and low-income patients, who make less than 400% of the federal poverty level, are typically eligible to submit charity care applications. Upon approval, patients can have the entire cost of their care completely covered or heavily discounted by the hospital. Considering that 31% of Texans earn less than 200% of the federal poverty level, 9 million Texans qualify for charity care.
Texas non-profit hospitals provide charity care and other community benefits to justify being exempted from paying federal and state taxes. According to the Lown Institute, in 2021, non-profit hospitals across the nation avoided paying $25.7 billion in taxes (i.e., property taxes, corporate income, bonds etc). Current estimates on non-profit hospital tax exemptions are projected to be somewhere between $27 to $32 billion. Institutions like Johns Hopkins and Rice University are producing studies finding that for-profit hospitals, that don’t get any tax-exemptions, are providing more charity care than non-profit hospitals, and non-profit hospitals in Texas are letting charity-care-eligible patients get sent to debt collectors.
Despite the expectation that Texas non-profit hospitals play a large role in supporting the state’s healthcare safety net, polling done by WPA Intelligence found that 87% of Texans are unaware that non-profit hospitals are required to provide charity care. Unfortunately, this is not shocking considering the Texas Health and Safety Code only requires hospitals to disclose their charity care policy by posting signs in conspicuous spaces throughout their facilities and publishing print newspaper ads in their community’s local newspaper.
What is even more perturbing is HHSC stated that there is no oversight process or procedure identified in state statute to verify whether or not non-profit hospitals are in compliance with their charity care disclosure requirements. The lack of well-defined methods of reporting and identifying patients who are eligible for charity care leaves Texans needlessly vulnerable to financial hardships in the face of astronomical medical bills.
When the HHSC report reviewed non-profit hospital charity care program details, they found that hospitals “did not provide yearly statistic information about charity care patients.” This forced the authors of the report to distribute a survey to report the number of patients enrolled on a hospital’s financial assistance policy, the number of rejected charity care applicants, and the number of rejected applicants that were sold as bad debt to debt collectors. The report notes, “In some cases, hospitals were unable or declined to provide the requested information, or did not respond to the survey request.”
In the HHSC report, large non-profit hospital systems, like Ascension, stated that 85,498 patients were enrolled on their charity care program, but none of their hospital profiles in the report recorded the number of rejected charity care applications or the rejected accounts sold to debt collectors. Other non-profit hospital systems like Baptist Beaumont reported 18,626 patients were approved for their charity care program. Of those 18,626,442 had their charity care applications rejected and the number of patient accounts sold to debt collections is still unknown.
Many hospital proponents will say that Texas non-profit hospitals are providing ample “community benefit” and merit their tax exemptions. However, the inability of HHSC’s researchers in the face of resistance from non-profit hospitals could not provide the necessary information needed to fulfill the study means there is no way to verify hospitals’ claims that they are going above and beyond to offer charity care to their communities.
Texas lawmakers have an opportunity to improve their oversight over non-profit hospital systems and ensure vulnerable Texans receive the charity care they need. In order to enhance transparency and accountability, lawmakers should require non-profit hospitals to pre-screen patients for their charity care program before sending patients to debt collections. This simple yet essential step would guarantee that low-income Texans know how to access the assistance non-profit hospitals are required to offer.
While there are many pressing issues this session, protecting sick and venerable Texans from being wrongfully sent to debt collections—especially by non-profit hospitals—should be a top priority.