Dive Brief:
- Washington hospitals and health systems filed a complaint against the state’s Department of Health on Monday, disputing a new interpretation of charity care in the state that requires certain providers to offer non-emergency charity care to all poor patients regardless of residency.
- The change to the state’s Charity Care Act will require certain large hospitals to provide free or discounted care beginning in January to all patients whose household income is up to 400% of the federal poverty level.
- In the complaint, the Washington State Hospital Association, which represents hospitals and health systems in the state, warned that patient care in general may be undermined if hospitals are required to care for non-Washingtonians due to strained hospital finances.
Dive Insight:
Nonprofit hospitals receive tax exemptions in exchange for providing charity care, which includes reduced or free services for low-income patients.
Washington hospitals’ care obligations have long been understood to apply to state residents, according to the lawsuit. In a notice released in September, the state’s Department of Health updated the guidance to apply to non-residents, implying the change would have minimal impact on health systems, as only a “small number of hospitals” restrict non-emergency charity care based on residency.
The Washington State Hospital Association disagrees. Requiring hospitals to offer free or reduced non-emergency services would make Washington a “medical tourism destination,” said Taya Briley, executive vice president and general counsel for the hospital association, in a statement.
The association argued in the suit that the expanded charity care interpretation would require hospitals to offer “scarce, costly and complex medical care” such as organ transplants and cancer treatment to non-Washingtonians. Inevitably, costs for Washingtonians will rise to subsidize out-of-state care, the suit alleges.
Approximately half of all Washingtonians are already eligible for free or reduced-cost care at Washington state hospitals, and state hospitals shouldered the cost of providing $370 million of such services in 2021, according to the hospital association.
“There is no such thing as free care. Nurses, physicians, pharmacists, housekeepers and other staff who care for charity care patients still must be paid,” hospital association CEO Cassie Sauer said in a statement. “Under the department’s interpretation, people living in Washington will subsidize charity care services to people from outside of the state.”
The lawsuit says many Washington hospitals are not poised to absorb further costs. State hospitals reported $2.1 billion in operational losses last year and $750 million in operational losses in the first six months of 2023, according to the suit.
WSHA is seeking a judgment from the court before the interpretation goes into effect on Jan. 16. The Washington Department of Health did not respond to a request for comment.
The lawsuit is the latest example of hospitals and lawmakers at loggerheads over the administration of charity care.
This month, Sen. Bernie Sanders, I-Vt., accused major nonprofit hospitals of providing paltry charity care even as facilities recorded rising profits. In a report, Sanders reviewed tax documents from 16 major nonprofit operators and found 12 dedicated less than two percent of their total revenue to charity care in 2021.
The report from Sanders followed a letter last month sent to federal tax commissioners from a group of bipartisan senators which sought a review of charity care tax regulations, arguing that current government oversight was “lax.”
Also this year, the Minnesota attorney general investigated nonprofits Mayo Clinic and Allina Health for allegedly suing patients with medical debt that ought to have qualified for charity care and withholding care for low-income patients with outstanding medical debt, respectively.
