Uncompensated Care Analysis

Topics: Health care, Health insurance, Health economics Pages: 5 (915 words) Published: September 17, 2014


 Uncompensated Care Analysis
Nikita Isaac
Grand Canyon University: HCA-530
September 10, 2014

Uncompensated care is defined in Mosby’s Medical Dictionary (2009) as services provided by a hospital or a physician or other health care professional for which no charge is made and for which no payment is expected. Uncompensated care provision is often used to measure hospital charitable care provided to uninsured or underinsured individuals. It is normally defined as “…the sum of charity care (for patients who are qualified for charity care and are deemed unable to pay after meeting certain criteria) and bad debts (for patients who presumably can afford to pay, but do not)” (Hsieh, 2010). Although one may argue that charity care is a precise measure, many researchers found that variations do exist across hospitals in hospital accounting for charity care and bad debt (Hsieh, 2010). Rundall et al. (1988) commented that hospitals may report their indigent care service as charity care or bad debt, depending on their ownership status. Because of tax consideration, for-profit hospitals tend to report their indigent care as bad debt whereas not-for-profit hospitals prefer to report as charity care. Nonprofit versus For-profit

Nonprofit hospitals claim uncompensated care as charity care. The decision of a patient’s capability to pay is built in the health facility’s policy. They normally decide the incapability to pay by looking into a number of reasons such as wages, resources, work status or accessibility of alternate funding (Apprise Health Insights, 2014). This is typically made preceding admission, specifically if the patient has asked and applied for financial help. Financial help given by the hospital may take care of all or some of the bill. For-profit hospitals defines uncompensated care as bad debt. By this it means that bad debt is the unpaid debt for care, centered on the hospital’s recognized fees, for patients who are reluctant to pay their bill. Unlike charity care, bad debt rises in circumstances where the patient has either not asked for financial help or does not meet the requirements for financial help. In these circumstances a bill for services provided. For uninsured patients, the sum of bad debt can relate to all or a little of the bill that is unpaid. For patients with insurance, unpaid copays and deductibles are considered to be bad debt if not paid (Apprise Health Insights, 2014). Perspectives and Responsibilities

The financial management staff has the responsibility of following the laws set by the patient protection affordable care act and the Internal Revenue. It states that there are few new necessities that health care facilities have to do to keep their tax exempt status. There are as follow: needs assessment; monetary aid policy; limits on fees, and billing and collections procedures. The staff has to have an assessment of what is needed in the community in place. Years to keep in compliance with the IRS. The patient protection affordable care act also requires hospitals to create a written financial assistance policy. This goes for all care that is provided throughout the hospital (Metcalf, 2013). Financial managers must make sure that hospital does not charge those without insurance more than they would those with insurance. They must also make sure that the bills are not overinflated when in collections (Metcalf, 2013). Basic Rules and Regulations

Uncompensated care is first calculated on a hospital by hospital basis. This is done by using the bad debt numbers and charity care numbers. The numbers are added together and then multiplied by the hospital's cost-to-charge ratio. The adding of these numbers together for equal the total uncompensated care cost. In 1990 changes were made on how bad debt and charity cases are viewed. This has now become the standard. These changes now have these two items being reported differently. Hospitals can no longer report charity...

References: American Hospital Association (2014). Uncompensated hospital care cost fact sheet (Updated January 2014). Retrieved from: http://www.aha.org/research/policy/finfactsheets.shtml
Apprise Health Insights (2014). Uncompensated care. Oregon Association of Hospitals & Health Systems. Retrieved from: http://apprisehealthinsights.com/public-reports/ucc/
Hsieh, Hui-Min, "The Impact of Medicaid Disproportionate Share Hospital Payment on the Provision of Hospital Uncompensated Care and Quality of Care" (2010). VCU Theses and Dissertations. Paper 2058.
http://scholarscompass.vcu.edu/etd/2058
Metcalf, D. D. (2013). Health Reform 's New Charity Care Requirements for Hospitals: Achieving Compliance to Avoid Penalties. Becker’s Hospital Review. Retrieved from: http://www.beckershospitalreview.com/finance/health-reforms-new-charity-care-requirements-for-hospitals-achieving-compliance-to-avoid-penalities.html
Rundall, T. G., Sofaer, S., & Lambert, W. (1988). Uncompensated Hospital Care in California: Private and Public Hospital Responses to Competitive Market Forces. Advances in Health Economics and Health Services Research, 9, 113-133
uncompensated care. (n.d.) Mosby 's Medical Dictionary, 8th edition. (2009). Retrieved September 10 2014 from http://medical-dictionary.thefreedictionary.com/uncompensated+care
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