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Charity Care

By Dr R Scott Poppen

     Even with a full and successful implementation of the Affordable Care Act there will still be 20 million plus uninsured Americans.  In my state of Utah, that will leave 120,000 uninsured if the state agrees to expand Medicaid (still an uphill battle here) and many more uninsured if it does not.  For many left without insurance, charity care will be their only option.

     In order to help Utah make a decision about Medicaid expansion, the state has established a Medicaid Expansion Options Community Workgroup.  I have had the pleasant fortune of serving on a subgroup of that committee exploring an enhanced statewide system of charity care as an option to expanding Medicaid.  Some in Utah have even advocated for placing the healthy population currently enrolled in Medicaid into a charity care system and using Medicaid only for the disabled and skilled nursing populations.  These advocates view Medicaid as a state-budget buster, un-sustainable federal entitlement program, and an unwanted entanglement with burdensome federal restrictions and regulations.

     Our committee discussions have been fascinating.  We struggled at first to even define charity care.  Certainly when a physician waives 100% of their fee that qualifies as charity.  But how about discounted fees?  How low does a fee have to be discounted before it is charity considering that most of us contract with insurance companies at lower than full fee-for-service rates?  Then there are the deeper discounted Medicare reimbursements and much deeper discounted Medicaid pay.  I have met more than a few colleagues over the years who claim that they are doing charity work simply by seeing Medicaid patients, and some making the same claim about Medicare patients.  When a federally qualified Community Health Center charges a sliding fee based on ability to pay, is that charity?

     Our committee reviewed a report on the amount of charity care available in Utah.  There is a lot and more than I had suspected.  Some of it is supplied by well known free clinics.  Much is available through nonprofit health systems.  Some multi-specialty groups have their own internal systems of charity care which is rarely made public.  Overall the system is very disorganized and difficult to enter.  The executive director of the Utah Chapter of the American Academy of Family Practice, a member of our group, submitted a study showing that 80% of her physicians found it extremely difficult or impossible to find charity care for their patients.  Except for free clinics, no one wants to proclaim very publicly they offer free services.

     The elephant in the room, never mentioned in our committee discussions, is that a large percentage, but not the majority, of charity care goes to undocumented immigrants.  Even free clinics downplay this in order to avoid the wrath of anti-immigrant groups, political very powerful in Utah, which may scare away charitable donations.

     The great oxymoron of charity care is this; charity care is never free.  Our committee asked free clinics what it cost them to see each patient.  Free clinics need facilities to practice in and always have some paid, permanent staff.  One clinic reported $30-40 a patient, another $200 per patient.  But since metrics between free clinics are not standardized and each free clinic model functions very differently from another, it is like comparing apples to oranges. 

     Our committee has been tasked with recommending changes to Utah’s charity care system and their impact on the state government’s general fund.  Many improvements we have come up will cost the state little.  A more expansive proposal is for the state to charter a nonprofit that would organize the state’s charity care.  For a cost of $1 to 3 million the state could establish a nonprofit which hires a full time staff that organizes, fundraises for, and runs a single, specialty-only, free clinic.  Primary care services would be based in existing offices.  The nonprofit would hopefully become sustainable thereafter with charitable donations.  The organization would go out and recruit specialists and primary care providers, and secure donated medical services from labs, imaging centers, surgi-centers, DME suppliers, mental health providers, and hospitals.

     What a deal!  The state is only out a few million.  But many don’t understand the real economic and social costs of charity.

      When a doc donates his time at a free clinic, is he seeing fewer patients in his practice and thus generating less state income tax revenue?  If he is seeing the same number of patients, is he feeling less of a need to donate time or money to other community nonprofits?  Is his free clinic commitment taking him away from being a scout leader, youth sports coach, leader in his religious community, or valuable family time?  A primary care doc that offers his office to see a patient for free still has overhead to pay and incurs increased demands on paid staff.

     Laboratories, imaging centers, cardiac/surgery/endoscopy suites can donate all they want but their facility, equipment, and personnel costs don’t go away.  These costs are shifted to a paying public and reflected in higher charges and insurance premiums.  Increased health care costs to the affluent sap resources available for donation to worthy charities of all types.

     Then you finally get to the most expensive care that goes on inside hospitals, where the money gets big and the cost shifting even bigger.  In the end, the state’s coffers are out $3 million but the cost to the state’s economy is in the many hundreds of millions. 

     A charity care system only works if you have volunteers.  Utah physicians donate their time generously, as do physicians all over the country.  There is scant evidence that they have more time and resources to commit.

     There is no space in this post to even touch on the question of whether the quality of charity care is remotely similar to that afforded a Medicaid patient.  Some free clinics in Utah report 6 month waits to see new patients.  I know from personal experience that it can take months to arrange even the most basic specialty consults and imaging studies from charitable sources.  For an ‘in-the-trenches’ report on the quality and frustrations of charity care, check out the excellent recent blog post by Progress Note contributor Dr. Chris Lillis.

     State legislatures should not pretend that the shifting of public health care costs to charitable sources is more efficient, saves money, or provides an acceptable quality of care.  Surely, charity health services and systems need to be strengthened in every state.   But charity is not a substitute for a robust expansion of Medicaid.    

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