Ala. Admin. Code r. 410-2-2-.06 - Health Care For The Medically Indigent

(1) The Problem

(a) There have been studies and estimates to determine the number of medically uninsured and underinsured, both in Alabama and nationally. Although the statistics may vary among the various studies, the conclusions are all consistent in that a large percentage of the population has either no health insurance coverage or the coverage is inadequate. According to the July 2018 U. S. Census Bureau's Quick Fact Sheet on Alabama, the uninsured population under age 65 is 12.0% of the total population of 4,887,871. Most of the uninsured were found in families where at least one person is employed, and most of the employed worked in small businesses. In 2010, the Congress passed the Patient Protection and Affordable Care Act, which ensured coverage for pre-existing conditions and dependent coverage under a parent's policy through age 25, which reduced the number of uninsured.

(b) Lack of health insurance coverage, including mental health coverage, contributes significantly to uncompensated care provided by those who deliver needed health care. The uninsured and underinsured often fail to seek needed health care services early when treatment is generally less expensive and more effective. The financial impact of the uninsured in Alabama is shown by 2018 data compiled by the Alabama Medicaid Agency. Total uncompensated care in Alabama was estimated to be $712 million. This number represents the total cost of care for charity care and bad debt, as defined by Medicare, as reported on Medicare Cost Reports filed by the ninety (90) acute care hospitals in Alabama with Medicare, a copy of which is also filed annually with the Alabama Medicaid Agency. This number, however, only reflects the cost for hospital care (not charges) and does not include other uncompensated health care costs from other providers including: Community Mental Health Centers, Psychiatric Hospitals, Nursing Homes, clinics operated by the Alabama Department of Public Health, Federally Qualified Health Clinics (FQHCs), Residential Treatment Facilities, and others. Also, according to the Alabama Medicaid Agency, Medicaid is required to provide to the Centers for Medicare and Medicaid Services (CMS) an audit of uncompensated care, called a DSH (Disproportionate Share Hospital) audit. This audit is used to justify DSH payments from the Federal Government which are used to reimburse hospitals for uncompensated care provided to uninsured patients. The definitions for uncompensated care in this instance are different than those used in the Medicare Cost Reports, but is the amount that Medicaid is accountable for with respect to uncompensated care. Utilizing this measure, the total Uninsured Uncompensated care hospital cost included in the audit for Fiscal Year 2015 was $510 million. Based upon this audit, hospitals in Alabama did receive a Federal DSH allotment of $333 million to partially offset the cost. Without Congressional action, however, reductions amounting to approximately forty percent (40%) of the Federal DSH allotments are required to take place in Fiscal Year 2020. According to Medicaid, current expectations are that these scheduled reductions will be deferred for one or two years.

(c) Providers should pursue collections based upon economic-means based policies in order to recover part of the cost of uncompensated care, and according to generally accepted standards. Bad debt is an increasing problem for Alabama providers.

(d) Bad debt is the unpaid charges/rates for services rendered from a patient and/or third-party payer, for which the provider reasonably expected payment.

(e) Charity care is defined as health services for which a provider's policies determine a patient is unable to pay. Charity care could result from a provider's policies to provide health care services free of charge to individuals who meet certain pre-established criteria as required by the 2010 Patient Protection and Affordable Care Act. Charity care is measured as revenue forgone, at full-established rates or charges. Charity care would not include contractual write-offs, but could include partial write-offs for persons unable to pay the full amount of a particular patient's bill.

(f) Uncompensated care is the combination of charity care and bad debt.

(g) Each county is responsible for indigent residents.

1. Article 7 Title 21 - Hospital Service Program for Indigents (§ 22-21-210), et seq.

2. Article 10 Title 21 - Financial Responsibility for Indigent Healthcare (§ 22-21-290), et seq.

(2) Recommendations

(a) The SHPDA should work with other state agencies to develop a database to determine the nature and extent of uncompensated care in Alabama and to monitor changes in the level of uncompensated care over time.

(b) The State is examining ways to encourage provision of medical insurance through employers and ways to more effectively utilize public funding sources.

(c) The State is examining establishment of a risk pool for small employers and for individuals who lose employer-provided insurance.

(d) The Statewide Health Coordinating Council believes that access to care, which is mandated as a part of the Certificate of Need (CON) Review process shall include the historical and projected charity care provided by each CON applicant and the impact each CON approval will have on access to health care for the medically indigent.

(e) Counties are encouraged to provide adequate resources to fulfill obligations in accordance with the following state statutes:

1. Article 7 Title 21 known as Hospital Service Program for Indigents (§ 22-21-210), et seq.

2. Article 10 Title 21 Financial Responsibility for Indigent Healthcare (§ 22-21-290), et seq.

Notes

Ala. Admin. Code r. 410-2-2-.06

Amended by Alabama Administrative Monthly Volume XXXIII, Issue No. 03, December 31, 2014, eff. 1/6/2015. Amended by Alabama Administrative Monthly Volume XXXVIII, Issue No. 06, March 31, 2020, eff. 5/15/2020.

Author: Statewide Health Coordinating Council (SHCC)

Statutory Authority: Code of Ala. 1975, § 22-21-260(4).