Skip to main content

Oregon To Lead Nation In Setting Minimum Amount For Hospital Charity Care

June 20, 2019

SALEM – Oregon's hospitals have long been required to provide free or discounted care for low-income patients under state and federal charity care laws.

But a bill close to becoming law would make Oregon the first state in the country to set minimum amounts that nonprofit hospital systems would be required to spend on patients who can't afford medically necessary treatment.

Advocates call House Bill 3076 a landmark piece of legislation years in the making. For the first time under the bill, Oregon's 60 nonprofit hospitals would be required to meet spending floors in consultation with the Oregon Health Authority. The health agency would set spending floors for each hospital every two years, using a variety of factors including annual profits, a hospital's current level of so-called "community benefit" spending and community needs.

Hospitals would be required to cover the health care costs of patients earning up to 200 percent of the federal poverty level – up to $24,980 for an individual or $51,500 for a family of four. And they would provide discounted care on a sliding scale for patients earning up to 400 percent of the federal poverty level. Many hospitals already waive debts for patients at or below the 200 percent threshold.

The bill would also prohibit medical debt from being passed to family members, cap interest rates hospitals and debt collectors could charge on medical debt and require hospitals to provide information and application paperwork for their charity care policies before sending them to a debt collector.

"This law will set up a different mentality, where when somebody walks into a hospital and they're low-income, (hospitals) have a moral responsibility to help them," Felisa Hagins, political director of the Portland-based Service Employees International Union, SEIU Local 49, told The Lund Report. "It is part of your mission, and now you have a legal responsibility. I think that really changes the dynamic around how people get offered charity care."

The bill passed the Senate 20-8 this week after clearing the House in May, and is expected to be signed by Gov. Kate Brown pending a legal review.

All but two of Oregon's 62 hospitals are nonprofits, exempting them from local property taxes in the communities they operate in. State law requires them to spend some of their revenues on community benefits like financial assistance to low-income patients.

But those community benefit policies and practices vary widely from hospital to hospital around the state. Critics say hospitals often conflate their voluntary charity care spending with financial assistance they're required to provide when the  treatment costs of patients on Medicare and Medicaid exceed the amount reimbursed by the government.

"They characterize this work as voluntary. This is misleading," Rep. Andrea Salinas, D-Lake Oswego, HB 3076's chief sponsor, told a Senate subcommittee earlier this month. "The hospitals are required to provide community benefit (spending) in order to keep their nonprofit status and the financial benefits that accompany it. What is voluntary for the hospitals is the amount of community benefit they provide to remain a nonprofit. This bill will help to align and assess every community's health needs and what the hospitals should be providing in community investment."

Since 2013, the Oregon Legislature has tried to develop uniform charitable spending requirements only to face pushback from hospital systems and the Oregon Association of Hospitals and Health Systems. They worked to kill previous efforts to set spending floors and increase notifications requirements to patients about the availability of free or discounted care.

Hospitals argue they've increased charitable spending without state mandates in recent years, after a steep decline due in part to the Affordable Care Act's expansion of Medicaid.

Since plummeting from $844 million in 2013 to a low of $315 million in 2015, statewide charity care spending by hospitals rose to nearly $430 million in 2017, Oregon Health Authority data show. A total of $124 million was spent in the first quarter of 2018, about 0.4 percent higher than the first quarter of 2017 according to the most recently available data.

The amount of charity care each institution provides varies among Oregon hospitals in the diagnosis-related group, which includes Oregon Health & Science University, which spent 2 percent of net patient revenue on charity care and Providence St. Vincent Medical Center, which spend 3 percent, according to health authority data from 2017. Legacy Health hospitals in the same group in the Portland area contributed more, with Legacy Good Samaritan Medical Center at 6 percent, Legacy Emanuel Medical Center at 7 percent and Legacy Mount Hood Medical Center at 15 percent. Willamette Valley Medical Center and Bay Area Hospital, which are in the same group, only contributed 1 percent. McKenzie-Willamette Medical Center contributed less than that but it’s a for-profit hospital.

Overall charity care contributions are still significantly lower than before the Affordable Care Act, even though hospital profits have soared in recent years. Critics say regulations should set charity care standards to ensure that hospitals are doing their part to prevent lower-income, working Oregonians from facing medical bankruptcy.

Hospitals argue the decline is because many patients who would have received charity care are now among the hundreds of thousands of Oregonians benefitting from the Medicaid expansion. they testified against HB 3076 early this session, arguing that spending floors would be too burdensome for the state to oversee because hospitals use different methods to calculate their community benefit spending.

But Salinas and Democratic leaders have since brought many of them on board. The initial bill would have revoked a hospital's tax-exempt status for two years for failing to meet spending floors. revocation was removed from the bill, and penalties in the final version are limited to civil penalties and fines – though Democrats have said privately they could introduce stricter penalties once hospitals adjust to the program.

Another amendment reduced the discounted care threshold from 600 percent of the federal poverty level to 400 percent.

"We believe HB 3076 is consistent with our mission and values," Providence Health & Services spokesman Gary Walker told The Lund Report in an email. "We are committed to ongoing collaboration with the Oregon Health Authority to implement these changes."

Following months of behind-the-scenes negotiations with hospitals and the Oregon Association of Hospitals and Health Systems, the amendments moved the lobbying group from against HB 3076 to being neutral on it.

"The original bill did not reflect the common ground reached during a year’s worth of work group sessions on ways to improve the system," hospital association spokesman David Northfield told The Lund Report in an email. The amendments "mean the system of community health needs assessments will continue, so that providers can direct their community benefit investments into programs that have the most impact."

The bill allows hospitals to meet their community benefit spending floors in part through programs that address "social determinants" of health in the communities they serve. Those include support for school-based health centers, low-income dental care, mental health services and investments in facilities like community pools where there is inadequate access to physical wellness activities.

The bill’s advocates hope HB 3076 starts a transformation in hospital systems that brings them closer to their original goal of caring for the poor and sick.

“We’ve seen hospitals move farther and farther away from their mission, so it’s time we started legislating their mission,” said Hagins, the SEIU political director. “I’m hoping I don’t have to hear another member’s story about how they got sent to (debt) collections because a hospital wouldn’t get them charity care.”

Have a tip about the health-care industry or legislation? You can reach Elon Glucklich at [email protected].