Oregon Health Authority Report on Nonprofit Hospital Community Benefit

Oregon, exceeding the trend of the federal government and many states, has sought to quantify the minimum amount of indigent care sufficient to meet a nonprofit hospital’s community benefit obligation.  In 2019, Oregon passed a law providing for what might be the most definitive quantification of community benefit to date.  It makes sense that Oregon would lead the nation in this regard since, according to a report summarizing the law’s effect to date, 58 of 60 Oregon hospitals are tax exempt.  The law “makes Oregon the first state in the country to set minimum amounts that nonprofit hospital systems would be required to spend on patients who can’t afford medically necessary treatment. And in fact, the Oregon Health Authority has, through implementation of a formula, set minimum spending necessary for community benefit for all 58 of its nonprofit hospitals.  Here is a summary of the law:

Requires nonprofit hospitals and their nonprofit affiliated clinics to establish financial assistance policies meeting specified criteria, including reducing charges to low-income patients. Establishes consumer rights with respect to billing and charges for services provided by nonprofit hospitals and their nonprofit affiliated clinics. Requires hospital to post certain information on website, including information regarding its community health needs assessment and three-year strategy to address health care needs of community. Requires Oregon Health Authority to establish community benefit spending floor for hospitals and affiliated clinics. Specifies process for setting community benefit spending floor and factors to be considered. Requires hospital to annually report to authority specified information regarding hospital, its health care facilities and its affiliated clinics. Prohibits insurer from prohibiting hospital from waiving all or part of copayments or deductibles as condition of reimbursement for services under policy or certificate of insurance.

The law, summarized in this PowerPoint presentation, mandated that the Ohio Health Authority (OHA) complete an implementation report be by December 2022 to assess the extent to which Oregon hospitals met the new community benefit requirement.  OHA issued the Lund Report recently and here are its conclusions:

HB 3076 directs OHA to launch a new hospital community benefit program with minimum spending floors in order to encourage hospital spending on patient financial assistance and equity-related investments at a community level. The bill directs OHA to establish a spending floor for each non-profit hospital in the state. Individual hospital floors are to be based on several criteria, including the hospital’s previous spending history, the hospital’s financials, and the hospital’s community needs assessments.

I. OHA has successfully launched the new community benefit program as directed in HB 3076 and hospitals are complying with the program’s new reporting requirements. Oregon’s new Community Benefit Program was developed in partnership with Oregon’s non-profit hospitals and other partners. Many different organizations and provider entities collaborated throughout OHA’s policy development and rule-making processes, which has contributed to a relatively smooth program launch. On Jan. 1, 2021, following a robust Rules Advisory Committee process, OHA formally established the community benefit program and assigned all Oregon non-profit hospitals their initial minimum spending floors. OHA used a separate Rules Advisory Committee process to focus on reporting and issued the official hospital affiliated clinic reporting form that same year. 

II. Hospital financial assistance policies are largely in alignment with the new legal requirements for patient financial assistance and medical debt. However, patients continue to experience challenges with accessing financial assistance and hospital billing practices remain an area of concern. Hospitals have updated their financial assistance policies (FAP) to be in alignment with statutory requirements for minimum levels of financial assistance at different income tiers. Most hospital policies pertaining to medical debt have also been updated to incorporate the added protections against referrals to collection and interest charges. However, patients and patient advocates report that financial assistance information remains difficult to find and understand at some hospitals, and application processes are complex and difficult to navigate. Some hospital staff struggle to understand and apply eligibility criteria that aligns to HB 3076, and report barriers to effectively screening and notifying potentially eligible patients of financial assistance prior to moving debts to collection.

dkj