YNNH is a non-profit hospital, one of the best in the US, and is the primary teaching hospital for Yale Medical School. As a non-profit hospital, it is also a safety-net hospital, meaning that it caters to the un- and under-insured. It is true that even for-profit hospitals are required to give emergency care to all who present to the ER, regardless of insurance status; a for-profit hospital could otherwise refuse a patient at the ER if their treatment costs were expected to be high, and dump them on a non-profit hospital (or a non-profit hospital could dump on another non-profit). This is a requirement of the EMTALA act. Safety net hospitals often receive government funding apart from Medicare and Medicaid, like Disproportionate Share Hospital payments, which compensate hospitals for providing disproportionately high amounts of care to the medically indigent.
Nonprofit hospitals also generally have policies stating who is eligible for free or discounted care. Trinity Health's hospitals will offer a full write-off to uninsured patients below the Federal Poverty Limit (FPL). A sliding scale discount is offered to uninsured patients going all the way up to 4x FPL, which is about $40,000 for a single person, or $60,000 for a family of 4.
YNNH, it seems, also has free bed funds, which are donor-restricted funds designated for people who cannot otherwise pay for care. In 2003, they were available to patients below 2.5x FPL. YNNH also had the Yale-New Haven Fund, an internally-funded free care program for patients below 1.5x FPL.
However, Uncharitable Care: Yale-New Haven Hospital's Charity Care and Collections Practices, a report written in 2003 and available here, finds that:
While the resources Yale-New Haven has available for free care have increased dra-
matically in recent years, the amount of free care offered at the Hospital has dimin-
ished:
• From 1996-2001, Yale-New Haven’s donor-restricted “free bed funds,” the income
from which must be used for free care, more than doubled in size, to $37 million.
• Payments to Yale-New Haven from Connecticut’s Uncompensated Care Pool and
related state programs nearly tripled over the past four years (after related taxes), to
$24 million in 2001.
• A non-profit, tax exempt institution, Yale-New Haven also realizes significant rev-
enues in excess of expenses, reporting $20 million in 2001 (a healthy 3.6% margin).
• From 1996-2001, Yale-New Haven’s free care offerings dropped 46%, even as
unpaid accounts classified as “bad debt” increased by 50%.
• After accounting for subsidies, Yale-New Haven’s $1.5 million in free care expense
for 2001 dwindles to a mere $12,000.
Yale claimed $66 million in uncompensated care in FY 2001. $3m was free care - services for which payment was not anticipated because the patient had successfully applied for either of the free care programs. $33m was Medicaid shortfall - Medicaid pays a pittance, and it is kosher in Catholic hospitals to count Medicaid shortfalls under community benefit. The other $30m was bad debt, accounts unpaid for a maximum of 90-120 days which were then transferred to a collection agency. Bad debt is considered to be a result of patients being unwilling, as opposed to unable, to pay. The Catholic Health Association does not consider it kosher these days to count bad debt under community benefit, although things may have been different then. In any case, this bad debt is what got them under scrutiny.
Uncharitable Care found that in FY '00, YNNH's two highest paid independent contractors were Tobin and Melien, a New Haven-based collections law firm, and Century Collection Agency, in North Haven. They were paid $1.7m and $1.2m respectively. YNNH's policy was to consider as bad debt "accounts of patients who have jobs or assets such as a house or investments that indicate that there is an ability, but an unwillingeness, to pay the bill." Indeed, in FY 02, YNNH was a lead plaintiff in 426 civil suits, 99% of which were collections or foreclosure suits. In FY01, most suits were won by default.
On Halloween night, 1997, Velma Williams’s step-son was shot and
taken to Yale-New Haven Hospital for emergency treatment. Although
Ms. Williams had health insurance through her clerical job at Yale
University, the child was uninsured, and his father, Mr. Greene, was
billed for the $6,000 in hospital charges. Soon after, Ms. Williams
divorced Mr. Greene, who moved to in South Carolina. “I still received
some of his mail, including the Yale Hospital bills, and I would forward
them to him,” Ms. Williams said.
In 1998, Yale-New Haven sued Mr. Greene for the bills and won a default judgment. About a month later, without Ms. Williams’s knowledge, Yale-New Haven placed a lien on the house Ms. Williams had won in the divorce settlement. “I found out about the lien when I went to refinance my mortgage,” Ms. Williams explained. When she tried to convince Yale-New Haven’s attorneys that she was not responsible for the hospital bills and the lien should be removed, “They told me I couldn’t contest the lien because my name wasn’t on the lawsuit.”
In early 1999, Yale-New Haven filed a foreclosure suit against Mr. Greene, won a
default judgment, and began preparations to auction Ms. Williams’s home. Charging
$175 per hour, Yale-New Haven’s attorneys at Tobin & Melien began to rack up over
$2,500 in legal fees that were added onto the outstanding debt (including $35 for a 12-minute phone call to Ms. Williams). Another $550 was added for appraisal costs.
In 2000, a couple of weeks before the auction date of May 27, Yale-New Haven’s
foreclosure committee placed a foreclosure sign in front of Ms. Williams’s house.
Desperate, Ms. Williams removed the sign and contacted Yale-New Haven’s attor-
neys, and in order to save her home, signed a contract agreeing to make a $10,342
lump-sum payment toward the total debt of $13,634 (the original $6,000, plus accrued
interest and the foreclosure costs). She agreed to pay off the remainder in $250 per
month installments (later lowered to $125). The contract states that the former judg-
ment lien (which was in Mr. Greene’s name) was to be replaced by a new one for the
unpaid balance (this time, in Ms. Williams’s name). The contract also states that Yale-New Haven retains the right to foreclose if Ms. Williams does not make the payments as agreed.
Ms. Williams made the lump-sum payment by refinancing her home, bringing her
mortgage rate up to 12%. “Now I pay $1,200 a month for the mortgage and it only
pays the interest.” Due to the lien and her ruined credit, she can’t find a bank that will agree to a second refinancing that would lower this payment. “I try to make the
monthly payment to Yale whenever I can, but sometimes I just can’t make ends meet,
because of the mortgage.”
In 1996, when Renee Trotman was working at Yale University on a
“casual” basis without benefits and her only health insurance was
Medicaid, she went to Yale-New Haven Hospital and learned that a pro-
cedure she needed wouldn’t be covered. A Hospital staff person helped
her fill out a form for what Ms. Trotman remembers as Yale-New
Haven’s “hardship program.” Ms. Trotman went in for the procedure,
and remembers never hearing from the Hospital’s billing office again.
“All I know is I did everything right and I never heard anything. So I
assumed everything was fine.”
In 1997, without Ms. Trotman’s knowledge, Yale-New Haven filed a lawsuit against
her for $6,500, plus interest and court costs, for the bills she thought had been taken care of. The court records show that a summons was left at her residence, but Ms. Trotman says she never received it. “We were sharing a mailbox with the folks on the first floor,” she said, and the papers were probably misplaced. Yale-New Haven won a default judgment against her for $7,600 (including retroactive interest and court costs).
The years passed, and Ms. Trotman never found out about the judgment until August
2002, when she suddenly found 25% of her Yale University paycheck missing due to a
wage garnishment. By this time, ironically, Ms. Trotman was working as a full-time
account assistant for the Yale School of Medicine’s own medical services billing department. Her job is to make sure that insurance companies are billed correctly. “That’s why I know there should’ve been steps to get in touch with me.”
Ms. Trotman appealed to the court to have the garnishment lowered to $25 a week:
“Did not know about outstanding bill or judgment. Hospital has purged records and is
unable to tell me why insurance at the time did not pay bill.” Due to the 10% interest that has accrued for nearly six years, she now owes over $11,000. “I’m still catching up now,” she said of the surprise wage deductions. Ms. Trotman is a single mother with two children, a 2 year old baby and a 7 year old. “It threw me off on the balance for day care, and I was doing pretty good on my utility bills, but now I’m behind again.”
YNNH's policy on free care is that patients must apply for public assistance and show proof of denial before receiving free care funds. Yet, Uncharitable Care found that there was considerable evidence that many patients were below YNNH's maximum income guidelines, and still were denied funds. Hospital and Medicaid enrollment paperwork is complex, and some patients fell through.
Some interviewed debtors said they had
applied for and been denied public assistance, or qualified
for aid that would not cover a Yale-New Haven charge.
One interviewee followed the Hospital’s instructions and
applied for public assistance after his discharge. Although
unemployed, he was rejected, twice, but was still stuck
with a $10,000 debt. Another interviewee successfully
enrolled in Medicaid after her Hospital stay, but too late
to receive retroactive coverage for her $3,000 in charges.
Aside from the free bed funds and DSH payments mentioned earlier, YNNH is free from federal, state and local taxation. Its debt is free from taxation, which means it can offer debt at lower rates, meaning that it pays less to borrow money. Graduate Medical Education funding also goes to teaching hospitals. And yet, the amount of free care, at charge, that YNNH has provided has decreased from $5.3m in 1996 to $2.9m in 2001. Bad debt increased from $20.1m to $30.3m. In FY 01, 0.29% of hospital charges were free care, compared to a statewide average of 0.51%. YNNH's free bed funds also grew (and they couldn't use them for anything other than free care), and their DSH subsidies, after taxes, grew from $8.1m in FY 01 to $24.4m in FY 03. This would be complicated to explain, but hospitals were able to game the DSH system and attract more payments than they should have.
Uncharitable Care found that YNNH had - accidentally or deliberately - failed to inform many patients about potential eligibility for free care. Their income restrictions may have been too low, because Connecticut isn't a cheap place to live. And YNNH had only sent notices in English, which places a special burden on people of limited English proficiency, who are also less likely to have knowledge of America's complex legal system and the rights available to them.
One does not count bad debt as charitable care. This gives incentive to inflate charitable care amounts by playing fast and loose with the definition of bad debt - which can place unusual burden on people of limited English proficiency, and people of color and the poor who are more likely to be uninsured. You look good in the eyes of the public, but God sees all.
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