Defining Charity Care at Hospitals

Financial Assistance for Patients

When patients are unable to pay for hospital services they fall into a category known as uncompensated care.  It’s an important subject in the health care world, because any services that a facility provides at no cost needs to be recuperated in some way.  Uncompensated care is comprised of charity care and bad debt.

Charity Care vs Bad Debt

Most hospitals offer care to some patients at no cost when they fit certain criteria.  This is known as charity care.  Bed debt on the other hand is when bills go unpaid because patients are unable or unwilling to pay.

Charity care is a carefully monitored process.  The total dollar amount of charity care is calculated annually using a hospital’s full established rates.  The eligibility and process used to obtain charity care varies by facility and is often called the Charity Care Process.  It’s estimated that most hospitals devote less than 2% of total expenses to charity and subsidized care.

Unlike charity care, bad debt arises in situations where patients have not requested or do not qualify for financial assistance.  With bad debt, hospitals provide a bill for services as normal procedure dictates.  For uninsured patients, the amount of bad debt can pertain to all or just a portion of a bill that is not paid.  For patients with insurance, certain amounts that are the patient’s responsibility, such as deductibles and coinsurance, are expensed as bad debt if not paid.

The Charity Care Process

Hospitals will typically determine a patient’s inability to pay by examining a variety of factors.  These factors include: sources of income, any assets that patients have and what types insurance patients have.

Determination of whether a patient meets the criteria for charity care status is usually made prior to admission to the hospital.  This is certainly true if the patient has requested and applied for financial assistance.  Occasionally patients may be granted charity care status after admission to the hospital.  This is very often dependant on the circumstances of the admission, such as an emergency admission.  Financial assistance provided by the hospital may pertain to all or just a part of a patient’s bill.

Learn more about Hospital Billing Terms