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News and Publications Home > News and Publications > In the News > JHM Statement on Uncompensated Care
Questions & Answers Q: What does uncompensated care include? A: Uncompensated care is comprised of charity care and bad debt costs. We provide charity care to patients who, based on our charity policy, are determined to be eligible. This charity eligibility is based on the patient’s financial resources in relation to federal poverty guidelines. The charity-care policy provides a sliding scale of free care based on the patient’s ability to pay. So, patients receive either free care or partially free care. Bad debt results when treatment is provided and people who have the financial resources to pay, choose not to do so or choose not to work out payment arrangements with the hospital. Q: Do the HSCRC rates allow for profits? A: Hospitals are allowed an operating “margin,” or what’s called revenue above expenditures, which is used for such things as new buildings, technology improvement and new programs that support their missions. Statewide, the operating margin for hospitals is in the 2 percent to 3 percent range. In addition, hospitals are expected under HSCRC rules to make full-faith efforts to collect unpaid bills from those who can pay so that these costs are controlled as well. Hospitals that are efficient at doing so are allowed a small additional margin. Unlike for-profit hospitals, The Johns Hopkins Hospital does not have shareholders or corporate executives who benefit financially from the operating margin. The only benefit goes to our stakeholders: the patients and community we serve. Q: Are all Hopkins patients advised of their financial responsibilities? A: Yes. All patients are required to sign an authorization notice which clearly spells out their financial obligations for medical care they receive. Q: Do the collection processes and procedures used by Johns Hopkins Medicine comply with the ethical standards developed by the Maryland Hospital Association? A: Yes, JHHS conforms to these principles and standards of the MHA Hospital Billing and Debt Collection Practices Principles as well as the MHA Minimum Standards for Financial Assistance in Maryland Hospitals. In addition, JHHS conforms with all pertinent federal and state laws regulations debt collection procedures. In fact, as to sliding scale Financial Assistance and the recommended levels of income, Hopkins standards exceed those of MHA. Hopkins sliding scale financial assistance eligibility ranges from 150% to 270% of the Federal Poverty Income Guidelines. Further, our contracts with all collection agencies specifically requires that: • The company shall perform the agreement in compliance with all applicable federal, state and local laws, rules, regulations, and ordinances including the Fair Debt Collection Practices Act and the Code of Ethics adopted by the American Collectors Association and represent that it and any personnel providing services hereunder has obtained all licenses and permits required by law to engage in the activities necessary to perform its obligations under the Agreement. • The company shall perform all services hereunder in compliance with the JHHS Finance Policies and Procedures concerning the assigned accounts. • The company's collection activities shall at all times be courteous, dignified and “businesslike.” Consultant will refrain from any practices, which may reflect discredit upon JHHS, or adversely affect JHHS’ reputation. Q: Does Hopkins, in determining patient debt status, distinguish between charity care (patient unable to pay) and bad debt (patient unwilling to pay). A: Absolutely. Patients lacking the financial resources to pay their health care bills may apply for charity care under the hospital’s charity care program. Hopkins spends approximately $32 million per year in such charity care. In other cases, patients will work with financial counselors at Hopkins to determine if they qualify for other health care reimbursement programs, such as Medicaid. In FY 07 alone, The Johns Hopkins Hospital spent $2.5 million of its own money to help patients obtain more than $80 million in Medicaid benefits for which they were deemed eligible. The Johns Hopkins Hospital will attempt to collect unpaid debt from patients who are deemed able to pay but choose not to. If such patients fail to honor their debts after repeated notifications by the hospital, their debts may then be referred to an outside collection agency. Q: Are patients who have refused to honor their debts turned away from The Johns Hopkins Hospital if they seek subsequent care? A: No! The Johns Hopkins Hospital will not deny care to patients who have outstanding bills. Instead, care will be provided as needed and Hopkins staff will provide assistance to these patients to resolve their outstanding debts. Q: When patient unpaid debt is referred for legal action, is interest added to the debt? A: As stated in our authorization notice given to all patients, patients agree to “pay all reasonable collection and attorney feeds required to collect any delinquent balance.” Many collection agencies, including the one used by Hopkins in the past, routinely request that the court award pre-judgment interest of 1% per month in all their lawsuits on behalf of all Maryland hospitals pursuant to Maryland regulations. Under the Code of Maryland Regulations, any payer not subject to Maryland insurance law is required to pay interest of 1% per month starting on the 61st day after the bill is sent. This regulation applies to self-pay patients. This is the same regulation that grants a prompt payment discount to self-pay patients. If suit is filed against a patient, the hospital is legally entitled to request prejudgment interest. Ultimately, it is for the court to decide if the hospital is legally entitled to the pre-judgment interest. Once judgment is entered by a court of law, the judicial rate of interest, 10% per annum, applies to the judgment until it is paid. To classify prejudgment interest as a “surcharge” is incorrect. Q: What happens if we don’t collect unpaid bills from those who can afford to pay? A: Those who refuse to meet their financial obligations put an unfair burden on those who do. Under terms of the Health Services Cost Review Commission system, all unpaid patient bills are calculated into the rates that Maryland hospitals are given approval to charge to all payers, including those without insurance, as well as commercial and government insurance plans. If these debts are not recovered by hospitals, all of these unpaid bills are spread around to those who do pay their bills. Collecting this debt helps patients by keeping costs down and no hospital is tempted to refuse care because someone cannot pay. In states without such a system, uninsured people may be charged 200 to 500 percent more than the actual cost of care in order to make up not only for the bad debt, but also to address the woeful fact that Medicare and Medicaid don’t pay their fair share of actual costs of health care. Q: Was the story of a patient who had received life-saving treatment at The Johns Hopkins Bayview Medical Center (JHBMC) and later sued to recover unpaid medical bills feature in a Dec. 21, 2008 article in The Baltimore Sun an accurate depiction of what happens to needy patients at JHBMC or any of the other two JHHS hospitals? A: No. Fortunately, this was a very unusual case. Frankly, an administrative error was made on our part. JHBMC personnel were unaware that this patient had been previously approved under the charity care program at another one of the JHHS hospitals. As soon as we became aware of this oversight we corrected our mistake immediately. A representative from JHBMC visited the patient at her home and presented her with a complete refund check, including interest. While these mistakes are rare, we take them seriously and are currently exploring ways to prevent their recurrence. Q: Why hasn't Johns Hopkins commented publically on the specifics of the patient cases cited in the Baltimore Sun articles on uncompensated care? A: While Johns Hopkins disagrees with the thrust of the articles on uncompensated care, due to considerations and legal requirements regarding patient privacy and confidentiality of health information, we are not at liberty to discuss individual patient information.