08/22/2024

How to Provide Charity Care

Guest Article: Elizabeth E. Hogue, Esq.

Providers inevitably find themselves in situations in which the provision of free care to patients seems necessary. While providers usually have good intentions, they must comply with applicable requirements. 

The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) says that providers may give free items and services to patients with demonstrated financial need. This exception based on financial need does not include cash or cash equivalents. Cash equivalents include checks, gift certificates, and gift cards. 

The following requirements must be met to qualify for this exception:

• Items or services are not offered as part of any advertisement or solicitation
• Offers to give items or services are not tied to the provision of other items or services reimbursed in whole or in part by the Medicare or Medicaid Programs
• There is a reasonable connection between the items or services and the medical care of patients
• Items or services are given only after a determination has been made in good faith that patients have financial need

The Anti-Kickback Statute (AKS) does not include a similar safe harbor or exception, but the OIG has stated that the AKS does not prohibit free care to patients who are unable to pay for items and services. The OIG recently reiterated that providers have the ability give relief to uninsured and underinsured patients who cannot afford their healthcare bills, consistent with their financial assistance or charity care policies.

The OIG went on to say that whether communication of these policies amounts to an “advertisement or solicitation” depends on the facts or circumstances. Making all patients aware of financial assistance or charity care policies through information on websites, for example, is appropriate. But offering “insurance only” billing as an inducement to attract patients is an advertisement or solicitation.

Good faith determinations that patients are in financial need is key to avoiding violations. Determinations should be based on policies and procedures that providers consistently apply to make these decisions. Policies and procedures should include requirements to document financial need. 

Providers have discretion to take a variety of factors into account to determine financial need. Such factors may include:

• Patients’ income, assets, and expenses
• Amounts due for services and items provided

Providers should avoid inflated income guidelines that result in free items or services given to beneficiaries who are not really in financial need.

Providers may ask patients to provide documentation of their financial status. Decisions about financial need may also be based on other reasonable methods, such as documented interviews with patients and questionnaires.

Policies and procedures that govern free items and services given to patients should also require periodic review of patients’ financial status, since it may change over time. Providers should recheck patients’ needs at reasonable intervals to help ensure that their financial status has not changed significantly.

The key to use of this exception is undoubtedly consistent application of a policy and procedure to make determinations about financial need. Now is the time to review or develop and implement policies that cover free items and services given to patients.

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©2024 Elizabeth E. Hogue, Esq. All rights reserved.

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