HFMA releases model charity-care policy for non-profits

The Healthcare Financial Management Association has released a model charity-care policy, in a move that is likely to help non-profit hospitals to prepare for tighter IRS scrutiny of their charity care policies. A more uniform charity-care policy among non-profits is likely to be helpful politically, as well, as excise taxes on badly-behaving non-profits are on the table in Congress.

The policy defines charity care as costs for care that "[are] never expected to result in cash inflows." The model policy specifies that patients who are eligible for subsidized or free care are uninsured, under insured, ineligible for government programs or otherwise unable to pay for medically necessary care.

It recommends various methods for determining need, as well, including an application, credit scoring or use of other public information, an asset assessment and prior payment history. Other alternative criteria it recommends include homelessness; residence in low-income or subsidized housing and participation in state-subsidized aid programs such as food stamps. In these situations, only discounts of 100 percent are appropriate, it says.

The policy didn't set threshold household income levels for eligibility, but it might yet have to make such recommendations. Otherwise, with states setting their own criteria, it might lose its opportunity to set the standard.

To learn more about the policy:
- read this Modern Healthcare piece (reg. req.)

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