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Why getting financial aid for medical bills can be difficult for low-income patients

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Texas leads the nation with the highest number and percentage of uninsured residents. Almost 20 percent of all Texans lack health insurance – that’s twice the national average. Nationwide, 26 million people lack health insurance.

Unexpected medical bills can wreak havoc on peoples’ finances, even for those that do have coverage. A surprise bill can sometimes end up setting patients back tens of thousands of dollars.

For low income-patients and the uninsured, financial aid programs from nonprofit hospitals can be a lifeline – if they can get approved. And oftentimes, that’s easier said than done, according to a new analysis from the Wall Street Journal.

Melanie Evans covers the hospital industry for the Journal and spoke with the Standard about the barriers patients face when trying to get payment assistance from hospital systems. Listen to the story above or read the transcript below.

This transcript has been edited lightly for clarity:

Texas Standard: Now, this article opens with the story of Ashley Harrison, who, as I understand it, faced a $36,000 bill for a hospital visit for symptoms of what ultimately ended up being leukemia. Can you tell us more about her situation?

Melanie Evans: Yeah. So she was billed $36,000. That was more than her annual income. It’s also less than what the hospital required for financial assistance. So she qualified, and she asked the system for help. She was told she should wait to apply while her insurance was pending. When she finally did apply, she was told she had waited too long. So she appealed and she just couldn’t get an answer. Meantime, she was facing this sizable bill that she just couldn’t afford.

And having that bill, I mean, unpaid on your record, it can have devastating economic effects. And to say nothing of the fact that she’s still fighting a really dangerous disease.

Absolutely. So like you’re at this moment where you’re incredibly vulnerable and ill and then you’re grappling with this extraordinary expense that you never planned for because how do you plan for a cancer diagnosis? And it’s more than you can afford. And so it’s both sort of stressful from a financial aspect, but one of the things that advocates talk about, and you can see it in surveys, is that when people are hit with unaffordable medical bills, they’re also less likely to seek needed medical care. And so there’s that added potential for harm from this financial stress created by really large medical bills.

So it would be one thing if this were a rare occurrence, but I think a lot of people listening right now know of or have experienced, you know, similar situations. What are some of the most common obstacles that people face when trying to get financial aid from hospitals? 

Yeah, you’re absolutely right. It’s not rare. I’ve covered this industry for my entire career. And patients and patient advocates say the application process itself is one of the most significant obstacles to getting aid. They can be really detailed. They can ask for a lot of documentation: tax records, bank statements, make and model of your car, information about your property, any property you might have, detailed household budgets. They want to know who’s in your household. It can be really comprehensive. There can be deadlines associated with applications that can be hard to meet. But the other problem is some patients don’t even know it exists. And this is one of the things that we looked at and found in the reporting, is that hospitals are not great at highlighting the availability of financial aid. Now it’s not every hospital, but we found quite a few that talked about payment first. So talk to patients about what they could afford and what they were going to pay before they ever got to the point that they raised the possibility of financial assistance.

Are there not rules that require disclosure of available financial assistance that hospitals must comply with?

Sure. So there are federal rules that require nonprofit hospitals to have to disclose their aid programs. They have to make the policies available on their websites. And then they’re supposed to include this information in sort of like you’re supposed to have a conspicuous written notice on your billing statement. But they can often be hard to find. They can be buried in the bottom page of a multi-page bill. And by the time you’re done looking through all of the amounts that you’re being charged and what you owe, patients don’t always see sort of the sentence at the bottom that says “reach out to us if you need financial assistance.”

Well, I suppose then there’s the issue of eligibility. You know, who does and doesn’t qualify for financial aid. Does that vary? I presume it does between hospital systems. Are there any standards?

There are some states that do set some standards on who is eligible, but there aren’t federal rules. So it will vary. It’ll vary across states. It’ll vary across hospitals. It is one of the areas where hospitals have quite a bit of freedom to decide. And we’ve looked at this issue and they exercise that freedom. They make choices. And some have policies that are more comprehensive. They include more people just because the cutoff for income is higher. And then others set it very close to the poverty line.

Some of your previous reporting also found that, despite billions in tax breaks, these nonprofit hospitals sometimes spend less on financial aid than some for-profit hospitals. Do I have that right? 

You do. So we looked at this issue, you know, what are nonprofits spending on their financial assistance? So we looked at all of these federal records for what hospitals report the cost of their free care is. And then we looked at that relative to how much revenue they take in. And what we found was that nonprofit hospitals wrote off about 2.3% of their revenue. But if you look at the for-profits, these are big publicly-traded, investor-owned companies that don’t get tax breaks. They were spending 3.4% of their revenue.

That’s interesting. Now, what about the hospitals themselves? What do they have to say about these issues that you’re finding, you know, the difficulties that people face in getting approved for financial aid? 

Well, we did talk to a couple of hospitals about something called – it’s got a really kind of dry term – it’s called “presumptive eligibility.” But really what that means is hospitals are allowed to auto enroll people in financial aid. Some don’t do it at all and others that do wait and send a bunch of bills first. Wait to see if patients submit an application and wait to see if patients pay anything. And they will then, sort of at the end of that process, run this kind of auto enrollment screening. And they catch quite a few people that were eligible for financial aid but didn’t get it. So we talked to some of those hospitals and what they said was they felt that an application is sort of a more accurate way to determine someone’s eligibility. And so that’s why they wait to see if somebody submits an application. The catch is that when people were ultimately approved through this auto enrollment process, if they had paid, a couple of hospitals that we talked to said that they would not refund the patient’s money. So it’s this, they’re pursuing payment. They’re collecting payment. They have the tools to auto enroll people and yet they wait. And this is an issue that we tried to look at specifically in the story.

Unfortunately, we don’t have time to unpack all of that here. But I know that a lot of listeners are probably thinking, “well, you know, I may know someone, I may need to apply for financial aid, for medical bills. Is there anything I can do or individuals can do to make this process easier?” I mean, I’m wondering if it’s possible for one to red flag oneself as a potential recipient right up front or send a letter as soon as you know you can saying “I believe I am eligible, can you send me the information?” Is there anything people can be more proactive on?

I think the thing that patients can do is they can say, “I want to know about your financial assistance policy. Can you help me get the information about your financial assistance policy? If I’m struggling applying for your financial assistance policy, can you help me?” Just repeatedly raise the question about financial assistance. It lets them know you’re aware that you could be eligible and that you’d like the information.

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