One million more Washingtonians will be eligible for hospital charity care and another million can receive discounted care under a bill recently signed by Governor Jay Inslee.

The new law sets new standards for health care systems and how they set billing thresholds for poor people. The law has one rate for smaller health care systems like Prosser Memorial Health; larger health care systems have another rate.  

Those larger health systems – which include Kennewick’s Trios, Pasco’s Lourdes and Richland’s Kadlec – must cover all costs for eligible patients with incomes up to 300 percent of the federal poverty level (FPL) with discounts for up to 400 percent FPL.

Smaller hospitals like PMH will provide full charity care for patients earning up to 200 percent of the poverty line, with discounts for patients earning up to 300 percent FPL.

The state adopted requirements for charity care in 1989. At that time patients earning up to 100 percent of the federal poverty line began receiving full relief for their hospitals bill. There was a sliding scale for patients earning up to 200 percent.

Attorney General Bob Ferguson requested the bill after years of lawsuits against health care systems in the state. The most recent lawsuit was against Providence Health & Services, which is affiliated with Kadlec Regional Medical Center.

Ferguson alleged in the February 24, 2022, lawsuit that Providence trained its employees to pursue money from patients eligible for charity care. The training program, RevUp, directed staff “to attempt to collect payment during every interaction with patients.”

“They make you beg for it”

In 2021 the Observer wrote about two patients having problems receiving charity care from Providence-affiliated hospitals. To protect their privacy, their real names weren’t used.

“Dolores,” who is disabled and on assistance, said that at Providence St. Mary’s Hospital Walla Walla, “They make you beg for it.”

“I’m on disability and have no secondary insurance and I get food assistance and housing assistance,” Dolores said. “It should be pretty clear that I am an indigent patient, and they know well ahead of the game what Medicare agrees to pay and what I will be left owing.

“I told them from the beginning that I couldn’t pay,” she said. “They let me flounder and go to collections instead of trying to work with me from the beginning.”

The state requires that the availability of payment relief be publicly displayed throughout the hospital including the places that patients check in.

Dolores said she didn’t believe that the hospital’s efforts to publicize the availability of the charity care were adequate.

It took her a year to settle her bill, about $8,000.

Another patient, “Cynthia,” had a different experience. She arrived at Kadlec after being hit by an SUV. The received $25,000, the minimum amount of liability insurance that a driver must have, so she could hire an attorney to help her negotiate the system. He worked with the surgeons and hospital to reduce the bills. To prove that she was truly indigent, her lawyer gave Kadlec a picture of his client working at her low-wage job.

I received bills after I thought I’d received all of the charity I applied for,” Cynthia said. “My attorney’s final (donated) assistance was to successfully pressure them to reconsider.”

Even with legal assistance, it took Cynthia over a year to settle her hospital bills.

Affordable Care Act reduced the number of charity cases

Washington hospitals have benefited from the Affordable Care Act, which reduced the number of uninsured in Washington. 

According to the Washington State Office of Financial Management (OFM), the 14% uninsured rate in Washington in 2013 had fallen to 8.2% in 2014 when the ACA went into effect and the state expanded Medicaid policies. That was the same year that Kadlec became affiliated with Providence.

Benton County’s uninsured fell more, from 13 percent to 4.8 percent, between 2013 and 2018 OFM reported. 

Unaudited financial records that the hospitals provide to the Washington Department of Health show that Kadlec had around $2 billion in patient revenue each year since 2020 and has operated in most years since 2013 with a multimillion-dollar positive margin.  

In addition, Kadlec received assistance from the federal government in the form of  grants and loans for COVID relief. The hospital received a grant for $11,850,000  in September 2020 and another grant for $25,402,560 in August 2021. Kadlec also received a loan of $80,394,079 in December 2020, an advance on Medicare payments.   

As a nonprofit, Kadlec pays no income taxes or property taxes. The hospital owns over $100 million in property in Benton County, according to the county auditor’s website in 2021. Normally, that would translate to at least $1 million in tax dollars. But much of their property is tax exempt and the county only collects about $335,000. 

The taxes collected come from parking lots and other properties that don’t directly affect health care.  For instance, Kadlec owns a 5-acre parcel on Dallas Road at Ava Way adjacent to the Badger Mountain South development. The property is assessed at $1,316,470 for which it pays a non-discounted $15,927 a year in property taxes.