Illinois hospitals would be forced to provide much more free and discounted care to needy and uninsured patients under two pieces of legislation proposed Monday by Illinois Attorney General Lisa Madigan.
Under the proposed Tax-Exempt Hospital Responsibility Act, all tax-exempt hospitals would be required to establish charity care policies – which Carle Foundation Hospital and Provena Covenant Medical Center, both in Urbana, and Provena United Samaritans Medical Center in Danville already have in place.
Hospitals also would be required to give away free and discounted care equal to at least 8 percent of their operating costs.
A separate proposal from Madigan, called the Hospital Fair Billing and Collection Practices Act, would require hospitals to adopt "responsible" collection processes in dealing with patients who can't pay their bills.
While the measures would apply only to tax-exempt hospitals, Anne Murphy, senior counsel for the attorney general, said Provena Covenant would still have to comply because the loss of its tax exemption in 2004 applies only to local property taxes but not other kinds of taxes.
The state stripped Covenant of its property tax exemption on the recommendation of the Champaign County Board of Review, based on a review of the hospital's charity care and collection practices. Covenant is challenging that decision. The state is considering a similar fate for Carle based on a recommendation last spring by the local board of review.
Lisa Lagger, spokeswoman for Covenant's parent company, Provena Health, declined to comment on Madigan's proposals.
Carle officials were expecting Madigan's announcement, but were away at a meeting Monday and unable to comment, Carle spokeswoman Gretchen Robbins said.
"We are aware of the legislation and will be thoughtfully analyzing it," she added.
Madigan said her bills would significantly improve the way hospitals do business in Illinois and would benefit needy patients being harassed by overly aggressive debt-collection practices on the part of hospitals.
Hospitals benefit richly from the tax exemptions they receive, but those benefits come with significant responsibilities to provide care for patients who can't afford it, Madigan said.
"Unfortunately, the hospitals haven't lived up to their part of the deal," she added.
In 2003, Illinois hospitals, on average, provided less than 1 percent of their total charges in charity care, Madigan said.
Madigan said both pieces of legislation would give hospitals clear guidelines to follow and spare them the lawsuits and investigations to which they have been subjected over their billing and charity care practices.
She also said some rural hospitals in the state would be exempt from the legislation, and that all hospitals that would fall under the new guidelines could apply the Medicaid shortfall – the difference between their expenses and what the state pays them for the care of needy patients – toward their minimum required charity care.
Both Carle and Covenant, which were under fire in recent years, have adopted more generous charity care guidelines and softened their debt collection practices.
Carle now provides free care to patients earning up to 200 percent of the federal poverty level and a sliding discount to patients earning between 100 percent and 300 percent of the federal poverty level.
Carle also now limits out-of-pocket medical expenses to 40 percent of a patient's gross annual income and gives a 25 percent discount to any uninsured patients if the bill is paid in 30 days.
The six Provena Health hospitals now provide free care to people earning up to 120 percent of the federal poverty level and discounts to people earning from 120 percent to 300 percent of that level.
Claudia Lennhoff, executive director of Champaign County Health Care Consumers, praised Madigan's proposals.
Lennhoff said local hospitals have improved significantly in their charity care and collection practices, but voluntary reform isn't working at other hospitals around the state.
Illinois Hospital Association spokesman Danny Chun said the association just got a look at Madigan's proposals Monday afternoon, but he sent an e-mailed response from association President Ken Robbins.
"In their present form, the proposals could be a real threat to the well-being of many hospitals which are already facing serious financial challenges," Robbins said.
Robbins contends most Illinois hospitals already meet or exceed the association's voluntary guidelines that call for free care to be given to patients earning at or below the federal poverty level and for discounted care for patients earning from 100 percent to 200 percent of that level.
CHARITY CARE FIGURES
How much charity care do hospitals provide?
The Illinois attorney general's office provided the following breakdown for area hospitals, based on 2003 data. The percentages reflect the portions of total annual hospital revenue.
Hospital, Total hospital charges, Charity care, Bad debt, Total
Carle Foundation Hospital, Urbana, $324,643,879, 0.82%, 2.32%, 3.14%
Provena Covenant Medical Center, Urbana, $176,364,563, 0.69%, 3.51%, 4.2%
Provena United Samaritans Medical Center, Danville, $176,364,563, 0.69%, 3.51%, 4.2%
Sarah Bush Lincoln Health Center, Coles County, $150,643,707, 0.66%, 3.94%, 4.6%
Gibson Community Hospital, Gibson City, $32,592,083, 0.31%, 2.91%, 3.22%
Dr. John Warner Hospital, Clinton, $14,007,083, 0.99%, 3.27%, 4.26%