Inquiring minds want to know: What is presumptive eligibility for charity care?
In a recent report from LA County that did a sweeping analysis of residents’ medical debts, one recommendation caught our attention: “eligibility assessment and prescreening” that “qualify patients for financial assistance early.” This recommendation is also termed presumptive eligibility (PE) for financial assistance (or charity care) and is a core element of the Undue Medical Debt policy agenda. Health systems can and should use technology solutions to bypass paper applications and determine eligibility for financial assistance programs early in the billing process. Without financial assistance, unpaid medical bills are considered ‘bad debt’ and patients are moved through a debt collection process that could impact their health and economic security.
The use of PE for financial assistance can be transformational for both the patient and the provider. Using PE is important because, quite often, eligible patients do not apply for financial assistance. Tools like PE save the patient from application paperwork when they are navigating a health issue and have limited time. In addition, PE saves providers from spending hours processing forms, freeing them up to focus on the business of delivering health care.
So how does PE for financial assistance actually work and why is it so important? As an organization that analyzes medical debt data, we know firsthand how much these tools can help reduce medical debt if implemented successfully. Below are our top five takeaways about presumptive eligibility for financial assistance or charity care.
#1 Presumptive eligibility (PE) for financial assistance is not the same thing as hospital PE
Easily confused, these two presumptive eligibility processes are different but can work together. Hospital presumptive eligibility (PE), expanded through the Affordable Care Act, allows hospitals to provide temporary Medicaid coverage to individuals likely to qualify for Medicaid. Upon sharing information with a hospital worker (household size, income, etc.), if an individual is found eligible, they are temporarily enrolled in Medicaid for an interim period; this creates timely access to quality coverage. In the case of PE for financial assistance, the hospital would perform an income eligibility screening either pre or post treatment but prior to billing to determine if the patient qualifies for their financial assistance with limited or no action on the part of the patient. This ensures patients that are unable to pay their bills due to income constraints receive free or discounted care in accordance with the hospital’s stated policies without having to jump through hoops. This means that less time is spent by patients on paper applications and the patient is removed from the debt collection cycle. When a low-income patient is unable to pay but is sent to collections, no one benefits. The hospital is never paid, and the patient is harmed.
#2 Presumptive Eligibility (PE) for financial assistance requires software that can be tailored to a health system’s needs
While the Affordable Care Act (ACA) requires nonprofit hospitals to have a financial assistance policy, the details are largely dictated by the hospital, including using a vendor to assist with PE for financial assistance screening. PE software is often part of a suite of revenue cycle tools that larger systems use to manage billings and collections. There are a growing number of companies that sell these products to large hospitals, often pairing them with Medicaid PE and other assistance programs for patients. Some examples include Experian, RevCo, Waystar and *FinThrive — these companies offer software solutions for financial assistance screening. Not all solutions are the same, however. It is important for hospitals to be deliberate in co-designing screening tools so that they do not bias against some populations in their communities. For example, the use of ‘propensity to pay’ (P2P), a metric based on people’s credit scores, could lead some patients to be dropped from financial assistance screens because they have a history of paying their bills on time.
Assessing a patient’s eligibility on the ability to pay is a better approach; this metric better aligns with both the spirit of financial assistance and application criteria that often rely on household income.
#3 Presumptive Eligibility (PE) for financial assistance is sometimes required by state law for some categories
Some states have taken steps to ensure that some populations are quickly triaged to financial assistance. For example, the state of Illinois requires PE for financial assistance for a number of patient categories. Some examples include Medicaid, SNAP, WIC or enrollment in a community-based program. A community-based program that provides access to medical care and documents limited low-income financial status as criteria, such as the DuPage Health Coalition, can be a critical pathway to financial assistance for some low-income populations that may not qualify for Medicaid. These categories make a lot of sense and illustrate how leveraging other means-tested programs to quickly move people to financial assistance is both efficient and compassionate.
#4 Smaller hospitals or those with revenue constraints may not use Presumptive Eligibility (PE) for financial assistance
There has been a good deal of media highlighting how rural hospitals and smaller community hospitals struggle to stay afloat. In particular, rural hospitals continue to close at an alarming rate and while the Centers for Medicare and Medicaid (CMS) has offered a pathway to more financial support, many are weary of a requirement that rural hospitals must largely eliminate their inpatient services and transfer patients to other hospitals. Even with a change in designation, hospitals will continue to need support to implement more sophisticated PE systems. For rural and smaller hospitals, investing in a PE software system could be out of reach despite having patient populations that may disproportionately qualify for financial assistance. These entities largely rely on paper applications and on patients taking the time to complete them. For many smaller institutions, the cost of PE adoption remains a significant barrier.
#5 More can be done to incentivize the use of PE across health systems and improve them
Because PE tools are not universally accessible, the federal government can play a role in helping to ensure that hospitals are leveraging technology to reduce medical debt. Specifically, they can provide resources to hospitals to invest in PE systems and use the opportunity to ensure that tools are meeting a set of criteria that best serves patients and reduces administrative burden. This could include robust notification for patients about the status of their financial assistance determination whether it’s for some financial assistance provided through a sliding scale or a zero balance that can put patients at ease. Importantly, it could include extending PE practices to insured populations who are increasingly in need of financial assistance due to high out-of-pocket costs.
As we listen to our beneficiaries, we continue to identify ways to mitigate the harm of medical debt. Presumptive eligibility (PE) for financial assistance is one tool that can remove barriers to accessing financial assistance programs designed to help patients.
*Undue Medical Debt works in partnership with FinThrive as part of their model to abolish medical debt.