Public Charge Rule to Boost Uncompensated Care Costs, Hospitals Say

September 12, 2019 - The American Hospital Association (AHA) and five other hospital groups urged a court on Wednesday to stop a Department of Homeland Security final rule that is likely to reduce the number of insured individuals, leading to greater uncompensated care costs for hospitals.

Finalized in August 2019, the final rule will expand the government’s ability to determine whether a legal immigrant is or will become a public charge, which makes them inadmissible to the US and ineligible to become a legal permanent resident.

A public charge is defined as an individual who accesses and is financially dependent on certain public benefits, such as food stamps, public housing, and Medicaid.

Under the previous policy, the government only considered Medicaid enrollment when determining an individual’s public charge status if the person used the coverage to pay for nursing home or other long-term institutional care, experts at the Commonwealth Fund explained.

The new final rule would expand that criteria with limited exceptions – children under 21 years of age, pregnant and postpartum women, and formally designated refugees and asylees – to any individual who uses Medicaid to pay for almost any non-emergency treatment within the 36 months preceding application for immigration or adjustment of status, the experts stated.

READ MORE: Medicaid DSH Payments Cover 51% of Uncompensated Care Costs

The rule would also allow the government to take other factors into the consideration, including an individual’s age, health, family status, assets, resources, financial status, and education or skills attainment.

The new rule is likely to seriously impact hospitals, leading industry groups recently told the court. Legal immigrants seeking citizenship may be discouraged from using public benefits they are entitled to, like Medicaid coverage, resulting in fewer insured individuals and greater uncompensated care costs for hospitals, the groups said.

Allowing the final rule to take effect on October 15 would strain hospital resources, preventing them from adequately investing in their communities, they stated in a friend of the court brief.

“Noncitizens and their families that drop or forgo Medicaid or CHIP coverage as a result of the Public Charge Rule will continue to have the same health care needs. But now they will likely postpone treatment, forcing hospitals to provide uncompensated care in emergency rooms for conditions that could have been treated, or even prevented, through primary-care visits. These added costs will likely prevent hospitals from fully serving their patients and communities,” the brief said.

Hospitals provided $38.4 billion in uncompensated care to uninsured and low-income individuals in 2017, the most recent year for which the AHA had data, the association reported earlier this year. That value is likely to significantly increase following implementation of the new public charge rule, the association and others recently reported.

READ MORE: CMS Details $43B Drop in Medicaid Uncompensated Care Support

The AHA and other hospital groups estimated that hospitals are at risk of spending as much as $17 billion dollars every year in additional uncompensated care costs following the new public charge rule.

The groups also argued that the rule would force hospitals to provide uncompensated care in one of their most expensive settings: the emergency department.

“[A]s patients delay preventative care, they will force hospitals to treat far more expensive and dangerous medical conditions that could have been caught much earlier but now present as emergencies,” they wrote in the brief.

Treating conditions that should be managed in the primary care setting costs 12 times more when services are delivered in the hospital emergency department, UnitedHealth Group recently reported. With about two-thirds of hospital emergency department visits being deemed unavoidable, the healthcare system could save an average of more than $1,800 per preventable emergency department visit, the managed care company added.

The uncompensated care burden will hit public and safety-net hospitals the hardest, the hospital groups stated.

READ MORE: GAO: Medicare Uncompensated Care Aid Not Based on Actual Costs

These hospitals are located in predominantly immigrant and lower-income communities. Therefore, the increase in uninsured patients following implementation of the rule “will force hospitals in already precarious positions to make difficult operational and financial decisions, including whether they must limit certain other services, close free clinics, or shut down entirely,” the groups wrote.

The hospital groups urged the US District Court for the Northern District of California to prevent the rule from taking effect next month. Their recommendation and arguments will be used as evidence in three cases that seek to invalidate the final rule – one brought on by the city of San Francisco and Santa Clara County, which has prevented the rule from taking effect while the case proceeds, and two other lawsuits filed in the same court by the attorney general of California and by nonprofits serving immigrant communities and advocacy organizations.