What Is Charity Scoring, and Why Does It Matter?

​Charity care — healthcare which is provided at reduced or no cost to low-income patients — is a key component of a care provider’s benefits to the community.

But how can you determine which patients should be eligible?

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What Is Charity Scoring, and Why Does It Matter?

Effective Charity Scoring Helps
Care Providers Help Their Patients

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Charity care — healthcare which is provided at reduced or no cost to low-income patients — is a key component of a healthcare provider’s benefits to the community. But how can you determine which patients should be eligible?
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If a low-income patient does not qualify for Medicaid (or if your practice is among the almost 30% that do not accept Medicaid), what criteria should you use for determining charity care eligibility?

Presumptive Eligibility

In order to determine who is eligible for charity care, providers can employ “presumptive eligibility screening.” This screening system reviews patients’ financial history to pre-qualify them for charity care. Using technology that leverages demographics, credit-score-related data, and social media information, patients can be proactively classified as charity eligible.

There are numerous reasons for using charity scoring:

• It allows healthcare providers to help patients who may be too embarrassed to seek assistance.
• It helps identify patients who don’t realize they qualify for charity care.
• It can be used to identify eligible patients with a language barrier.
• It helps alleviate patients’ fears of losing other public benefits if they qualify for charity healthcare.
• By qualifying patients for charity care, healthcare professionals provide a benefit to their surrounding communities.

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Ensuring IRS Compliance
Charity screening also allows billing departments to target only those patients who can afford to pay. This not only reduces bad debt, but it also ensures that healthcare providers comply with federal regulations.

For example, IRS regulation 501(r) requires that "a hospital organization must “make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collections against the individual.” 

(This requirement applies to any provider of medically necessary services within a hospital's organization.)

In other words, charity care eligibility must be determined before a patient’s account is sent to a collection agency. This means providers must categorize their delinquent patient accounts as either charity care or bad debt. Without effective charity scoring, healthcare facilities can end up writing off thousands of dollars from patients who may have been able to pay their medical bills with some assistance.

They also risk running afoul of IRS 501(r) (and losing their tax-exempt status) by pursuing payment from patients who would qualify for charity care.​​​

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Notifying Patients of Charity Care Eligibility

Increasingly, individual states have begun requiring that care providers notify patients of their eligibility for charity care. Failure to comply can keep care providers from receiving reimbursement funds from the state that would offset bad debt.

But in order to comply with these regulations, providers must demonstrate that they have made a reasonable attempt to notify their patients of eligibility. This means systems are needed for tracking all attempts to locate patients. The notification process can be labor-intensive and time-consuming, but it can also result in improved patient satisfaction and better fulfillment of a provider’s obligation to the community.

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Managing Charity Care

As the low-income segment of our population increases, healthcare providers are facing a mountain of paperwork for uncompensated care. Charity care management can easily become a full-time venture. 

At Reliant Financial Services, our charity scoring systems use an evaluation model to identify patients who meet both federal and state income criteria according to Federal Poverty Guidelines. As an RFS client, we can help you utilize your debt collection resources to pursue payment only from those patients who are able and likely to pay for your services.

We’ll also provide compassionate, personal follow-up to the patients who qualify for charity care. We not only notify them of their charity care status, we also ensure that they understand your charity care process.

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Want to know more?  

If you want to know more about how the professionals at Reliant can help your practice be more efficient and proactive with charity care services . . .

CLICK HERE

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Sources:
Featured Image: Adobe, License Granted
​Health Journalism
Healthcare Finance News
Transunion
American Hospital Association