Charity Care, Non-profit hospitals requirements under Internal Revenue Service (501r),
“Every day that we live with years of accumulated ‘old regulations, rules, and procedures,’ heath care is healing patients only to have the puzzle of uncompensated care crushing the finances and spirits of those least able to protect themselves – our uninsured, indigent, and underinsured patients. They are our neighbors and our family members…”
US Department of Health and Human Services Guidance (Definitions)
Charity Care- The value of medical expenses that exceed the patient’s financial ability to pay the charges so as to not cause the individual being rendered medically indigent.
Medical Indigent- Patients whose health insurance coverage, if any, does not provide full coverage for all of their medical expenses and that their medical expenses, in relationship to their income, would make them indigent if they were forced to pay full charges for their medical expenses
Internal Revenue Service (IRS) technical explanation for § 501(r) (5)
Each hospital facility is permitted to bill for emergency or other medically necessary care provided to individuals who qualify for financial assistance under the facility’s financial assistance policy no more than the amounts generally billed to individuals who have insurance covering such care. A hospital facility may not use gross charges (i.e., “chargemaster” rates) when billing individuals who qualify for financial assistance. It is intended that amounts billed to those who qualify for financial assistance may be based on either the best, or an average of the three best, negotiated commercial rates, or Medicare rates.
PPACA sec. 9007, now codified in Section 501(r) of the Internal Revenue Code, which provides:
“(5) LIMITATION ON CHARGES. — An organization meets the requirements of this paragraph if the organization—
“(A) limits amounts charged for emergency or other medically necessary care provided to individuals eligible for assistance under the financial assistance policy described in paragraph (4)(A) to not more than the lowest amounts charged to individuals who have insurance covering such care, and
“(B) prohibits the use of gross charges