Nonprofit hospitals expanded charity care policies after COVID. But some changes raise red flags, study finds

By Dave Muoio / September 29, 2022

Many of the country’s bigger nonprofit hospitals adjusted their charity care policies following the onset of COVID-19, with more organizations doing so at the benefit of their communities than not, according to a new study.

Among a geographically representative sample of 151 large nonprofits with 2019 and 2021 policies available for review, researchers found policy updates among 84.1% and “substantial changes” for 51% of hospitals, researchers revealed in the study, which was published this week in JAMA Network Open.

Forty-seven (31.1%) of the hospitals adopted policies the researchers said were “distinctively” more generous, while 12 (7.9%) were more restrictive. Hospital ownership type and Medicaid expansion were not associated with hospitals adopting policy changes that were clearly more generous or restrictive.

“These expansions are remarkable given the lack of federal requirements to do so,” University of South Carolina and Johns Hopkins researchers wrote in the journal. “However, there are reasons for concern despite the generally positive changes.”

Across the 242 individual policy changes they identified, researchers deemed 55.8% to be more generous and 19% to be more restrictive. The remaining 25.2% were classified as “indeterminate,” which the researchers said was often due to lack of specificity in the new or old policy.  

Changes that were more generous most often addressed eligibility criteria, researchers wrote.

The most commonly seen restrictions were tied to residency requirements, either related to the hospital’s service area or an individual’s immigration status. Others introduced “unusual” service restrictions such as exclusion of coverage for birth control, self-harm or care while in law enforcement custody.

Alongside the new restrictions, researchers raised red flags over many policies’ vague language that “limits patients’ understanding of charity care policies and may conceal policy changes over time.”

They also highlighted nine hospitals that were a part of merger and acquisition deals during the study period and saw updates to their charity policy. Four hospitals representing a merger of two systems all adopted a shared charity care policy that was more restrictive than their prior policies and represented more than a quarter of all restrictive changes included in the study.

“It might seem logical that economies of scale for hospital consolidation could lead to expansion of charity care policies; similarly, Medicaid expansion reduces the uninsured population and could cause hospitals to adopt more generous charity care policies,” researchers wrote. “However, the results in our analysis do not provide supportive evidence, which is in line with prior research.”

The authors wrote that their sample likely characterizes a large portion of the U.S. acute care hospital sector, as many of the larger hospitals included in the study were part of health systems that would have uniform charity care policies across their locations.

However, “nonspecific language is common in charity care policies, which limited our analysis and may conceal additional changes over time. Our findings suggest that greater transparency and simplification in charity care policies—especially for eligibility criteria—are needed to ensure adequate access to charity care.”