EXHIBIT A

THE UNIVERSITY OF TEXAS SYSTEM

REPORTING OF UNREIMBURSED MEDICAL CARE

 

A.  OVERVIEW

The Executive Vice Chancellor for Health Affairs and each Chief Administrative Officer have approved uniform policies and procedures for the reporting of "unsponsored charity care".  These policies and procedures shall be applicable to all U. T. System Health Institutions, effective Setpember 1, 1995.

All U. T. System Health Institutions must use the definitions of the components of unsponsored charity care.  Procedures on how to determine and report unreimbursed medical care also are included.

B.  DEFINITIONS AND POLICY

    Unsponsored Charity Care:
    Financially Indigent. Unsponsored charity care shall include unreimbursed services to the financially indigent. Financially indigent shall mean uninsured or underinsured patients accepted for care with no obligation or a discounted obligation to pay for services rendered based on a teaching hospital's or clinic's formal eligibility system which may include: (a) income levels and means testing or other criteria for determining a patient's inability to pay; or (b) other criteria for determining a patient's inability to pay that are consistent with the hospital's or clinic's mission and established policy. The federal poverty level shall serve as an index for the threshold below which patients receiving care at all U. T. Health Institutions are deemed financially indigent. Financially indigent services include both noncovered services and contractual allowances for patients eligible for the Medicaid program, services provided under county indigent care contracts, and other state or federal assistance programs for low income groups.

    Medically Indigent. Unsponsored charity care shall include unreimbursed services to the medically indigent. Medically indigent shall mean patients who are responsible for their living expenses, but whose medical and hospital bills, after payment by third party payers, where applicable, exceed: (a) a specified percentage of the patient's annual gross income (i.e., catastrophic medical expenses) in accordance with a teaching hospital's or clinic's formal eligibility system in such instances where payment would require liquidation of assets critical to living or earning a living; or (b) the criteria for determining a patient's inability to pay as established by all U. T. Health Institutions.

    Charity Care Determination
    The determination that a patient is financially or medically indigent should occur within 60 days of the patient's discharge from the hospital or clinic.

    Contractual Adjustments
    Contractual adjustments to commercial contracts and Medicare shall not be counted as unsponsored charity care. Contractual adjustments do not apply to commercial or Medicare capitated contracts.

 

    Bad Debt
    Bad debts shall not be counted as unsponsored charity care. Bad debts shall include the uncollected billed charges for services rendered to patients who do not qualify under the definition of unsponsored charity care. Contractual adjustments shall not be considered bad debt.

    Other Unreimbursed Medical Care
    Uncompensated medical care that does not fit one of the above definitions, such as professional or patient courtesy or care provided as part of a research project, shall not be considered unsponsored charity care.


C.  PROCEDURES

Financially Indigent

 

Patients with income between 0 - 184.9% of the Federal poverty level would have 100% of the gross charges less any payments received (from third party carriers or patients) considered as unsponsored charity care. For patients at 185.0 - 249.9% of the Federal poverty level, 50% of the charge would be unsponsored charity care. The remaining 50% would be considered unsponsored charity care if the patient met the criteria of one of the other components of unsponsored charity care, i.e. medically indigent. If none of the other criteria could be met, the remaining 50%, if not paid, would be considered bad debt. Patients with income greater than 250% of the Federal poverty levels would, in most cases, be considered full pay patients with any charges not paid considered bad debt. As the definition for financially indigent also includes underinsured patients, the amount of unsponsored charity care would be the portion not paid by the carrier (or the patient) and then applying the index. For example, a patient with income at 200% of the Federal poverty level with a $1,000 medical expense and whose insurance paid $600, would be responsible for $200 (50% of the remaining $400 balance). The other $200 would be considered an unsponsored charity care.

For patients who cannot or choose not to provide the data necessary to determine if they qualify for financially indigent status, a portion of the gross charges less payments received can be reported as unsponsored charity care based upon the percentage of gross charges determined to be charitable of a validated statistical sample of this pool of patients. The gross charges shall be allocated to unsponsored charity care and bad debts according to the results of the sample. For example, if the sample size of the pool was 275 patients, and it was determined that 85% of the patients' income fell into the less than 185% Federal poverty level category, 14% fell into the greater than 185% but less than 250% category and the remaining 1% fell into the over 250% category, then 92% (see the illustration below) of the gross charges from the entire pool of patients would be considered unsponsored charity care and the remaining 8% would be bad debt.

Index Charity Level Sample Charity
0 – 184.9% 100% charity 85% 85%
185.0 – 249.9% 50% charity 14% 7%
250.0% + 0% charity 1% 0%
100% 92%

The journal entry required to properly account for the right amount of unsponsored charity costs would be based upon how the U. T. Health Institution originally disposed of the charge. If the gross charges in the example above were originally written off to bad debt, then 92% of the amount would need to be reclassified as charity care. If the gross charges were originally written off as charity care, then 8% of the amount would need to be reclassified as bad debt.


Medically Indigent

While financially indigent is based strictly on an income level, medically indigent considers both income and living expenses (food, clothing and shelter) and the patient's ability to pay without liquidating assets critical to living or earning a living, such as a home, car, personal belongings, etc. Therefore, patients are considered for medically indigent status on a case by case basis. The patient would be required to provide documentation of income and living expenses to determine if he/she is to be considered medically indigent. All patients are eligible to be considered for medically indigent status with the exception of patients with income below 185% of the Federal poverty level as these patients are considered 100% charity under the financially indigent category.

After reviewing the demographic data, the patient is considered medically indigent when the patient's total professional and hospital account balance, from any provider and after third party reimbursement (if any), is greater than 20% of the family's total gross annual income or the patient's account balance exceeds 36 months of disposable income (take home pay less the cost for food, clothing and shelter). The patient responsibility would be the lesser of these two determinations. The amount considered for medically indigent status is the amount exceeding these thresholds. For example, a patient with income of $20,000, $10,000 in medical expense, $100 a month in disposable income and no insurance would be responsible for $3,600 ($100 X 36 = $3,600 is less than $20,000 X 20% = $4,000) of his account and the remaining $6,400 would be considered unsponsored charity care as medically indigent.

Return to BPM Table of Contents
Provided by: Office of the Executive Vice Chancellor for Health Affairs

Last Updated December XX, 2001
Send comments about this page tomailto:onramp@utsystem.edu Attn: Office of the Executive Vice Chancellor for Health Affairs
The University of Texas System Administration