Report: Changes in Charity Care Regulations Could Hinder Access

A new study warns that if the Legislature approves changes to charity care regulations, thousands of California residents could be denied certain health services regardless of their insurance status, the Sacramento Business Journal reports.

The study, by the California Hospital Association, was conducted in conjunction with former California Director of Finance Tom Campbell and the Berkeley Research Group.

Background

The report comes ahead of an expected renewed debate over a charity care bill (AB 975) that failed last year (Robertson, Sacramento Business Journal, 1/17).

The bill -- by Assembly members Rob Bonta (D-Oakland) and Bob Wieckowski (D-Fremont) -- would have increased the level of charity care not-for-profit acute care facilities must provide and tighten hospital reporting requirements.

Current California law requires not-for-profit hospitals to submit community needs assessments every three years to prove that the public is benefiting from the hospitals' tax-exempt status.

The legislation would prohibit hospitals from counting several types of expenses as charity care, including:

• Promotional activities;
• Research;
• Staff education; and
• Unpaid bills written off as bad debt.

Hospitals opposed the legislation, while several labor unions endorsed the measure (California Healthline, 4/8/13).

Report Findings

The report found that AB 975 or similar legislation would:

• Reduce the amount of care provided by not-for-profit hospitals;
• Cause not-for-profit hospitals to cut health care jobs;
• Cost the state millions in revenue because of the loss of income tax on fewer health care workers;
• Delay or cancel investments related to not-for-profit hospital expansions; and
• Increase the cost of financing not-for-profit hospital expansions.

Reaction

In a call with reporters on Thursday, Campbell said enacting legislation such as AB 975 could result in unintended consequences.

However, Wieckowski in a statement said new regulations on charity care are needed.  

He said, "These important medical facilities receive millions of dollars in favorable tax treatment by Californians and in return are expected to provide lower-income residents in their communities free or reduced-cost medical care."

Wieckowski said he plans to introduce a new bill if AB 975 does not pass again this year. He said, "The idea is to create a standard for measuring the level of charity care provided by [not-for-profit] hospitals and holding them accountable" (Sacramento Business Journal, 1/17).