Medical Bill Help at Not-For-Profit Hospitals

Jun 15 08:09 2011 Nicholas Newsad Print This Article

If you’re uninsured, I advise you to become aware of the difference between not-for-profit providers and for-profit providers.

Most of the original “hospitals” in the U.S. were started by churches as charities for the sick and dying. In 1910,Guest Posting something called the Flexner Report was published, which had the effect of forcing physician specialists and university medical schools to “marry” themselves to hospitals where large numbers of sick people were located in one place. This was great for physicians because they no longer had to ride a horse all over town going from house to house.

Ironically, 100 years later, healthcare has become the fastest growing business segment of the U.S. economy and about 60% of community hospitals are still legally set up as church-sponsored charities or education-related charities. Both church-sponsored hospitals and university-based hospitals have a not-for-profit status.

If you are uninsured, this is great news for you. Though not-for-profit hospitals are bound by the broad-based definition of “health promotion” of the IRS, in the society we live in, they are still held to something called the charity care standard. Not-for-profit hospitals have to provide “free” charity medical care or the IRS will slap huge penalties on them. What is also good for you is that it is becoming harder every year to be a physician and more and more of them are becoming employees of these not-for-profit hospitals. If you went to a Catholic, Presbyterian, Methodist, or Lutheran hospital, I’m confident that you are going to be have a fair chance of accessing some fair financial iad. It is the same with university hospitals.

Generally speaking, if you’re having trouble paying your bills and you can change your provider, I advise you to try to go to a not-for-profit hospital in the future. You can tell your physician this too. They can take you to any hospital you want if you tell them why.

In the past few years, not-for-profit hospitals have been under very close scrutiny when it comes to providing charity care to the uninsured. If you are genuinely experiencing hardship, and they refuse to work with you, the hospital faces major legal penalties. Over 400 class-action lawsuits have been filed by Richard Scruggs and ten other law firms against not-for-profit hospitals on behalf of uninsured patients, claiming that tax-exempt hospitals are not justifying their exemption because they bill uninsured and underinsured patients with full charges. Setting fair discount levels is truly an ethical challenge for hospitals. Setting the discount levels too high will compromise the financial livelihood of the hospital while setting discount levels too low will prohibit some patient needs from being met.There are several states on the forefront of ensuring medical care is available to the uninsured:


Minnesota is the central state in the community benefit debate. Minnesota Attorney General Mike Hatch threatened to file a suit against 110 Minnesota hospitals if they were non-compliant with a two-year contract he established with the Minnesota Hospital Association that set the level of required charity care at 5% of operating costs and established guidelines for collection practices. The collection practice guidelines force hospitals to give patients with net incomes less than $125,000 the “most favored” discount rate of each hospital’s payers. This means that the uninsured in Minnesota get the same financial treatment as the patients with each hospital’s best insurance contracts.


One out of five California citizens is uninsured (7 million) and another 3 million are underinsured. California hospitals provide $4 billion in uncompensated care annually. The guidelines established by the California Healthcare Association are uniquely vivid among guidelines established by other state hospital associations and the American Hospital Association:

• “Fear of a hospital bill should never prevent any Californian from seeking emergency health care services.”

• “Financial assistance provided by the hospital is not a substitute for personal responsibility.”

• “Patients who are at or below 300% of the FPL are eligible to apply for financial assistance under each hospital charity care policy or discount payment policy.”

• “… each hospital should limit expected payments from these patients … to amounts that do not exceed the payment the hospital would receive from Medicare …”

• “For patients who have an application pending for [financial assistance] a hospital should not knowingly send that patient’s bill to a collection agency prior to 120 days from the time of the initial billing.”

• “Any payment plans offered by a hospital … in settling past due outstanding hospital bills shall be interest free.”

• “The hospital or outside collection agency operating on behalf of the hospital shall not … use wage garnishments or liens on primary residences as a means of collecting unpaid hospital bills.”


In February of 2004, the Illinois Department of Revenue withdrew the tax-exempt status of Provena Covenant Medical Center. In September of 2006, the Illinois Department of Revenue re-affirmed the 2004 judgment. The director of the Illinois Department of Revenue based his decision on 2002 figures that reveal Covenant’s revenues of $113 million and charitable activities of only $831,724 (only 0.7%). Covenant’s argument that non-reimbursed costs of Medicare and Medicaid be counted as charity was denied.

The Director of Revenue quoted:

"This small amount of charitable care is so seriously insufficient that it simply cannot withstand the constitutional scrutiny required to justify a property tax exemption. And since 97.7% of Covenant’s revenue 'was generated from the exchange of services for payment', the hospital’s property could not have been considered used exclusively for charitable purposes.

Provena appealed to Sangamon County Circuit Court which decided in favor of the health system in July of 2007. Then the Illinois Attorney General Lisa Madigan got really fired up and filed an appeal against Provena. The 4th District Appellate Court of Illinois decided against Provena in August of 2008. Provena appealed again to the Illinois Supreme Court, which should render a decision in early 2010.

Hill-Burton medical facilities and NAPH hospital members

From 1946 up through 1997, the federal government gave grants and loans to hospitals, health clinics, and nursing homes as part of the Hill-Burton Act. One stipulation of Hill-Burton was that the hospital recipients had to agree to provide free and discounted medical care to patients that met the income eligibility requirements up to a certain level every year. As of the first of the year in 2011, there are only 192 of these facilities left. There are no longer any Hill-Burton facilities in the states of Alaska, Indiana, Minnesota, Nebraska, Nevada, North Dakota, Rhode Island, Utah, or Wyoming. Puerto Rico is the only U.S. territory with a Hill-Burton facility.

It is my opinion that the poverty income requirements set by the Hill-Burton Act are very stringent. As an individual, you would have to make less than $10,830 per year to be eligible for free care and less than $21,660 per year for reduced cost care. The more people there are in your family, the easier it is to be eligible for free or reduced cost care. For a family with four people, you would be eligible for free care at incomes less than $22,050 per year and eligible for reduced care at incomes less than $44,100 per year. Hill-Burton defines “income” as gross income (before taxes). I also want clarify that once a Hill-Burton facility meets the annual requirement for the discounted care, it can elect to not provide anymore discounted care for that year.

The Hill-Burton program for discounted care is administered by the federal government’s Health Resources and Services Administration which falls under the Department of Health and Human Services. You can view a list of Hill-Burton hospitals, clinics, and nursing homes at to determine if there is a facility near you.

This past year I also became aware of a sub-set of hospitals that appear to self-identify themselves as the nation’s “safety net hospitals”. According to a presentation I saw by the National Association of Public Hospitals (NAPH), the hospital members of their association only account for 2% of all hospitals nationally, but they provide 19% of all uncompensated care. Looking through their membership I counted 68 separate health systems representing a total of 140 “safety net” hospitals. They seem to represent many university medical center members as well as many city and municipal-sponsored hospitals. As a whole, the NAPH members appear to be large providers of care to uninsured and Medicaid patients. You can browse through the list of NAPH hospital and health system members at

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Nicholas Newsad
Nicholas Newsad

Nicholas Newsad, M.H.S.A., is the founder of and has been interviewed and quoted by the Today Show, L.A. Times, NY Daily News, Tampa Tribune,,, and numerous other radio shows, magazines, and newspapers for his book The Medical Bill Survival Guide.  

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