Certified Home Health Agency Charity Care Report
The regulations implementing Chapter 959 of the Laws of 1984 which became effective in 1986 included provisions for certified home health agencies (CHHAs) to provide minimal levels of charity care. The charity care requirements promulgated in 1986 (Section 763.11(a)(11) of Title10 of the New York Codes, Rules and Regulations (NYCRR) assured that new agencies, both voluntary and for-profit, provide their fair share of charity care cases. Subsequent to the promulgation of the regulations in 1986, the Department reviewed applications from 75 new home care agencies some of which were for-profit organizations including some publicly traded companies. These requirements, outlined below, were added to the Certificate of Need (CON) methodology for any new agencies and program requirements were revised to place a charity care standard on all agencies.
The basic definition of charity care is found in Section 763.11(a)(11) of Title10 of the New York Codes, Rules and Regulations (NYCRR):
(11) for certified home health agencies only, ensure the provision of charity care in each fiscal year of the agency in an amount no less than two percent (2%) of the total operating costs of the agency in that fiscal year for not-for-profit and for-profit agencies and agencies operated by public benefit corporations and three and one-third percent (3-1/3%) of total operating costs of the agency for public agencies. Charity care is care provided at no charge or reduced charge for the services the agency is certified to provide to patients who are unable to pay full charges, are not eligible for covered benefits under title XVIII or XIX of the Social Security Act, are not covered by private insurance, and whose household income is less than two hundred percent (200%) of the federal poverty level. Adjustments to the required percentages of charity care may be made by the department upon recommendation of the appropriate health systems agency to reflect significant county variations from the state average with respect to the proportion of indigent and medically uninsured persons to the total population.
A baseline report on the provision of charity care by CHHAs was developed by the Department in 1990. The report was presented to the State Hospital Review and Planning and Public Health Councils (SHRPC and PHC respectively). The Department and Councils concluded that most of the new agencies were not yet operational and that proceeding with penalties did not make sense at that time. Therefore, for the period 1987-1989 a better level of compliance was sought through plans of correction from agencies not meeting the minimum requirements. It was further determined that a later report would be conducted on the provision of charity care.
A 1991 report was conducted and shared with the SHRPC and PHC in 1993 and included the following highlights:
- $22 million in CHHA charity care was provided during 1990 representing 3.8 percent of CHHA operating costs.
- 65 percent or 106 of all agencies were in compliance with minimum requirements.
- 35 percent or 57 agencies were not in compliance (35 voluntary; 16 for-profit, 6 public).
- Based on the standards set by the regulations, there was a $1.2 million shortfall by agencies not in compliance. Agencies which existed prior to 1988 demonstrated a reduction in the provision of charity care (1987 – 1990).
However, there were some positive trends during this period:
- A redistribution of the burden was reported. New agencies absorbed a portion of the burden and for-profits did slightly better than new not-for-profits.
- During the period 1987-90, 88 out of 163 agencies reported increases in the gross dollar value of charity care provided.
- By 1990, 50 percent of those not in compliance provided at least one-half of the required amount. A review of 1987 indicates 25 percent of those reporting would not have been in compliance if the requirements had been in effect.
As a result of this report, the Department and Councils determined that plans of correction were only minimally successful in gaining compliance. Enforcement actions would be taken against agencies whose provision of charity care did not meet at least one-half of one percent of operating costs. There were 21 enforcement actions as a result of this policy. The enforcement actions resulted in fines to those agencies of $2,000 per year for each year of non-compliance between 1987-90. The stipulation and orders that resulted from the fines also required Department approval of all compliance plans. In 2002 a review of 2000 data indicated that 79 voluntary and proprietary agencies were not in compliance.
On December 19, 2007 a Dear Administrator Letter (Attached) was sent to all CHHAs, which stated that beginning in 2003 the certified cost report would be utilized for determining charity care instead of the non-certified data previously reported to the Department on form DOH 519.
A review of the cost report data on charity care for calendar year 2004 indicates:
- $14.7 million of charity care services were delivered in 2004 representing 0.8 percent of CHHA operating costs.
- 15 percent or 22 of all agencies were in compliance with minimum requirements. Eighty-five (85) percent or 126 agencies were not in compliance. This is a major reduction from the 65 percent compliance in 1990. (Please note the 1990 data is based solely on statistical data reported in DOH 519 form as opposed to cost report data now required).
- Overall Compliance in 2004 was 14% for the Voluntary, 23% for the Public and 4% for the For-Profit agencies.
- Provision of charity care ranged from a low of 0.1 percent in the Finger Lakes region to a high of 2.2 percent in the Northeast region.
- Compared to 1990, compliance by sponsor has shifted dramatically as indicated in the following table.
Percent of Agencies in Compliance
|Facility Based (Hospital or SNF)||Voluntary||51%||26%|
- *utilizing 519 data
- **utilizing cost report data
- The shortfall in the provision of charity care services was $27.0 million in 2004 as compared to $1.2 million in 1990 when compared to required targets by operating costs reported.
- While 36 percent of agencies increased the amount of charity care provided during this period, 64 percent experienced decreases in gross dollars of charity care provided.
- During this period, the number of free care visits declined by over 50,000. Partial pay visits declined to 12,408 visits a dramatic reduction from the 137,361 visits reported in 1990.
- 48 percent of agencies not meeting the charity care targets also reported deficits on their cost reports in 2004.
The data from the agencies cost reports for 2004 show that 85% of CHHA providers do not meet the requirements for the provision of charity care (2% for voluntary and for-profit agencies, and 3.3% for public agencies). It should be noted that there have been agencies during this period that have increased the provision of charity care. However given the significant level of noncompliance, it is necessary to review relevant issues that impact the entire industry. The following are issues that need to be further explored by Department staff with input from the Councils and the industry.
- Changes in enrollment and access to other programs that serve to the needs of the population under the current regulatory definition of charity care such as Child Health Plus and Family Health Plus. Have these programs reduced the number of individuals in need of charity care?
- Increases in operating costs and the fixed percentage approach of the requirement. Has the 1986 standard become obsolete?
- Changes in accounting practices. Has there been an impact on the calculation or collection of information?
- Lack of recent enforcement activities by DOH. Has this resulted in a lack of compliance by providers?
- Historically most charity cases were referred from hospitals. What changes in referrals or types of cases have reduced the provision of charity care?
- Agency internal policies and referral mechanisms. Do the agencies have in place mechanisms to seek and or provide outreach to provide charity care? Are County Health Departments knowledgeable about the charity care provisions?
- WillCare's Charity Care Study is currently underway in Western New York and the Hudson Valley with an anticipated completion date of June 30, 2008. This study may provide insight from a single provider that should be duplicated by other providers.
In consideration of the substantial lack of compliance related to the current charity care regulatory provisions, the Department will be notifying agencies of their noncompliance and requiring them to develop and submit an explanation of why charity care has not been provided and plans for complying with this regulatory requirement. These plans of correction are expected to be a source of information about the problems associated with this requirement.