California Hospitals Must Cough Up Millions To Meet Charity Care Rules

California Attorney General Xavier Becerra has ordered three California hospitals to pay out millions of dollars to local nonprofits, declining their requests to be freedfrom charity obligations required under state law.

The hospitals, based in the Central Valley and Los Angeles, argued that there isn’t as much need to support charity care because millions more people have health insurance under the Affordable Care Act, and therefore don’t need as much financial help to pay medical bills.

Becerra’s refusal signals his agreement with health consumer advocates, who argue that patients still are struggling to pay their bills, even when they have insurance. While it applies to just a few hospitals, the decision sends a message to hospitals around the state, some of which want similar relief.

The California Hospital Association sent a letter to Becerra in September, saying that 32 hospitals wanted more “flexibility” in their charity care obligations.

Two hospitals, Saint Agnes Medical Center in Fresno and PIH Health Hospital in Downey, had also requested to reduce their charity care obligation but withdrew their proposals before Becerra made a decision.

“We were thrilled” by the attorney general’s decisions, said Jen Flory, a policy advocate with the Western Center on Law & Poverty, which advocates for health care for low-income Californians.

Flory said the letters show that Becerra understands there are still “unmet needs” for financial assistance for people who have high-deductible plans or can’t afford their out-of-pocket costs.

“Many of them may not be presenting in the emergency room, but that doesn’t mean that there’s not additional outreach that hospitals could do” to help these patients afford their care, Flory said.

The three hospitals were issued denial letters by the attorney general’s office on Friday.

As a result, petitioner Mission Community Hospital in Los Angeles is required to pay about $1.7 million to at least one local nonprofit organization providing medical services for low-income and homeless residents, for failure to meet its charity care requirement in fiscal year 2016.

Emanuel Medical Center in Turlock is to pay about $1.9 million for the poor to meet its 2016 requirement. And the University of Southern California’s Verdugo Hills Hospital must donate almost $1.7 million to local medical service providers to meet its 2017 requirement.

A spokesperson for the USC hospital said the lump sum mandated by the attorney general is on top of what it is already spending on free care and services to the community, such as health seminars and screenings.

Under state law, California’s attorney general can set specific charity care requirements for hospitals when a nonprofit hospital merges or is acquired by another nonprofit or for-profit company.

Separately, federal law requires nonprofit hospitals to provide an unspecified amount of free or discounted care — or other charity, such as donations to community groups — in exchange for tax breaks.

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