In March of this year, the Washington State Legislature passed Substitute House Bill 1616, significantly expanding the state’s charity care law. All acute care hospitals licensed under RCW 70.41 and all psychiatric hospitals licensed under RCW 71.12 are subject to Washington State’s charity care law and are required to have a charity care policy in place that is compliant with the law.

The expanded requirements of the charity care law become effective July 1, 2022, but hospitals are required to take action prior to July 1, 2022, so that they can be in compliance as of the effective date.

Action Required

Charity care policies must be submitted to and approved by the Washington State Department of Health (“DOH”) at least 30 days prior to the policies going into effect. The new charity care law becomes effective July 1, 2022, which means that hospitals will have to file their proposed changes to their current charity care policy by June 1, 2022. The updated charity care policies should be submitted for approval to DOH by email: [email protected]. Hospitals must post their current charity care policy on their website.

The required changes to each hospital’s charity care policy will be effective from July 1, 2022 forward. The required changes are not automatically retroactive to time periods prior to July 1, 2022. However, hospitals can choose to make their required changes retroactive as the changes significantly expand charity care requirements.

Changes in Coverage

The basic construct of the charity care law remains in effect with some notable exceptions, as detailed below. The “sliding fee schedule” has been eliminated and is replaced by a more rigid free and discounted care model based on the patient’s family size, income level relative to the Federal Poverty Level and which hospital provides the care. In order to qualify for charity care, the patient or their guarantor who qualify for charity care must have exhausted any third party coverage.

The new law divides hospitals in Washington into 2 groups based on a number of variable factors. Group 1 includes “a hospital owned or operated by a health system that owns or operates three or more acute care hospitals . . . an acute care hospital with over 300 licensed beds located in [King County], or an acute care hospital with over 200 licensed beds located [in Clark County].” Any hospital that does not qualify as a Group 1 hospital is considered to be a Group 2 hospital.

Group 1 Hospitals

Group 1 hospitals must provide free care to patients “whose income is not more than 300 percent of the federal poverty level, adjusted for family size. . . .”

Patients “whose income is between 301 and 350 percent of the federal poverty level, adjusted for family size, [are] entitled to a 75 percent discount for the full amount of the patient responsibility portion of their hospital charges, which may be reduced by amounts reasonable related to . . .” certain assets as detailed below.

Patients “whose income is between 351 and 400 percent of the federal poverty level, adjusted for family size, [are] entitled to a 50 percent discount for the full amount of the patient responsibility portion of their hospital charges, which may be reduced by amounts reasonable related to . . .” certain assets as detailed below.

Group 2 Hospitals

Group 2 hospitals must provide free care to patients “whose income is not more than 200 percent of the federal poverty level, adjusted for family size. . . .”

Patients “whose income is between 201 and 250 percent of the federal poverty level, adjusted for family size, [are] entitled to a 75 percent discount for the full amount of the patient responsibility portion of their hospital charges, which may be reduced by amounts reasonable related to . . .” certain assets as detailed below.

Patients “whose income is between 251 and 300 percent of the federal poverty level, adjusted for family size, [are] entitled to a 50 percent discount for the full amount of the patient responsibility portion of their hospital charges, which may be reduced by amounts reasonable related to . . .” certain assets as detailed below.

Consideration of Asset Information

Asset consideration is not mandatory. However, if a hospital “considers the existence, availability, and value of assets in order to reduce the discount extended, it must establish and make publicly available its policy on asset considerations and corresponding discount reductions.”

Certain assets are exempt and hospitals may not consider the value of these assets to reduce the amount of the charity care discount allowed:

  • Any equity in a primary residence;
  • Retirement plans other than 401(k) plans;
  • Any prepaid burial contract or burial plot;
  • One motor vehicle and a second motor vehicle if it is necessary for employment or medical purposes;
  • Any life insurance policy with a face value of $10,000 or less;
  • The first $5,000 of monetary assets for an individual or $8,000 of monetary assets for a family of two, and $1,500 of monetary assets for each additional family member.

Other restrictions are imposed on hospitals that choose to consider asset information. Hospitals cannot impose procedures that create an “unreasonable burden on the responsible party” it is seeking information from. Hospitals can only request information that is “reasonably necessary and readily available to substantiate” whether the person is eligible for charity care.

The documentation process cannot be used to discourage applications for charity care:

  • Duplicate forms of asset verification may not be demanded;
  • With respect to monetary assets, one current account statement is considered sufficient for a hospital to verify a patient’s assets;
  • If no documentation for an asset is available, the hospital must rely on a written and signed statement from the responsible party;
  • Asset information obtained by the hospital in evaluating a patient for charity care cannot be used for collection activities;
  • Verification of facts is limited to facts relevant to eligibility for charity care.

An important exception to the above is that hospitals may consider assets as required by CMS for Medicare cost reporting purposes.

Additional Duties Imposed on Hospitals

As part of the changes to the charity care law, a new duty has been imposed on hospitals to identify patients who may be eligible for health care coverage through medical assistance programs under Medicaid or the Washington health benefit exchange and then actively assist patients to apply for any available coverage. If the hospital determines that the patient or guarantor is eligible for retroactive Medicaid coverage but the patient or guarantor fails to make a ”reasonable effort to cooperate” with the hospital’s efforts to assist them in applying for the coverage, the hospital is no longer obligated to provide charity care to that patient.

Hospitals may not impose application procedures for charity care or for assistance with retroactive coverage applications that place an “unreasonable burden” on the patient or guarantor. When making the determination of what constitutes an “unreasonable burden” the hospital is to take into account “any physical, mental, intellectual, or sensory deficiencies, or language barriers which may hinder the responsible party’s capability of complying with applications procedures.” The new charity care law states that it is an “unreasonable burden” to require a patient to apply for any state of federal program where the patient is obviously or categorically ineligible or has been deemed ineligible in the prior 12 months.

What Has Not Changed

As noted above, many of the charity care law obligations remain in place:

  • Each hospital must post and prominently display notice of charity care availability;
  • The notice must be posted in all languages spoken by more than 10 percent of the population of the hospital’s service area;
  • Notice must be displayed in areas where patients are admitted or registered, emergency departments, and financial service or billing areas accessible to patients;
  • Current versions of the hospital’s charity care policy, a plain language summary of the hospital’s charity care policy, and the hospital’s charity care application form must be available on the hospital’s website in all languages spoken by more than 10 percent of the population in the hospital’s service area; and
  • All hospital billing statements and other written communications regarding billings or collections must include language, in both English and the second most spoken language in the hospital’s service area, language substantially similar to the following:

You may qualify for free care or a discount on your hospital bill, whether or not you have insurance. Please contact our financial assistance office at [website] and [phone number].

Action Items

  • Review current charity care policy and update it to comply with changes set to take effect on July 1, 2022.
  • Submit the updated charity care policy to DOH at [email protected] for review and approval by June 1, 2022.
  • Make sure your current charity care policy is posted on the hospital’s website and post updated charity care policy when it becomes effective.
  • Update the plain language summary of the charity care policy to match the updated policy.
  • Make sure the updated plain language summary is easily accessible and posted on the hospital’s website.
  • Conduct workforce training programs to ensure that workforce members are familiar with the new charity care policy.