Charity Care - State Reimbursement For Charity Care

State Reimbursement For Charity Care

The state of New Jersey has a program to provide reimbursements to hospitals and other health-care institutions which provide uncompensated or undercompensated health care to patients lacking private health insurance whose income falls below a certain amount but is too high to qualify them for Medicaid and are not old enough to be eligible for Medicare (New Jersey's situation is somewhat unique among American states in that the state has no county or municipal hospitals).

The scheme provides free health care to uninsured state residents whose income is up to 200% of the federally designated poverty line, and provides discounts which gradually phase out at incomes between 200% and 300% of the poverty line; the patient's liquid assets (not including the patient's home and one automobile) must not exceed $7,500. Also, the maximum any individual qualifying for aid under the aforementioned criteria can be liable for in a single year is 30% of that patient's gross income for that year. A special fund was designed to compensate the health-care provider—which may have furnished either inpatient or outpatient services—for the applicable difference in cost. However, New Jersey hospitals are reimbursed for charity care at below their cost to provide these services, which helps account for the fact that in the past two years, nine hospitals have closed in the state and six others have filed for bankruptcy, according to the New Jersey Hospital Association.

Some private health-care providers in other states—particularly those that are operated on a nonprofit basis (often by religious entities)—also provide free and/or low-cost health care to uninsured patients, using income thresholds similar to those observed statewide in New Jersey; but state laws vary widely as to how much, if any, reimbursement (usually in the form of tax credits) the institution receives for so doing (and in only one other state besides New Jersey—Washington—does an outright mandate exist to provide charity care). Perhaps the most famous example of such an institution was the Charity Hospital of New Orleans, founded in 1732 and now run by the Medical Center of Louisiana, now closed due to damage from Hurricane Katrina.

In 2007 the community hospitals in Washington State agreed to uniform standards for providing free and reduced cost care to low-income individuals. The new standards were less generous than existing practice for four out of ten community hospitals, but is stronger than existing state law. Care is free for families with incomes below the federal poverty level. Between one and two times the federal poverty level patients may buy care at cost; between two and three times the federal poverty level uninsured patients are charged no more than what an average insured patient would pay.