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GAO Investigating Hospitals' Uncompensated Care

March 30, 2005—House Ways and Means Committee Chairman Bill Thomas, R–Calif., has asked the Government Accountability Office (GAO) to compile information about hospitals' uncompensated medical care for a hearing to be scheduled possibly in May.

Jon Ratner, assistant director of Medicare payment issues at GAO, said the agency is gathering data that individual states have collected on hospitals' uncompensated care, which includes "charity care" and bad debt. Depending on the state, the entity contacted could be a health department or another agency that deals with Medicaid, the shared federal-state health care program for the poor.

"We're looking at their provisions of uncompensated care, their charity care and bad debt, and the extent that differs between different types of hospitals: non-profit, for-profit, government," Ratner said in an interview. "You're looking at dollar amounts. That's what you're interested in." Ratner said the GAO is not contacting individual hospitals.

Ratner said the investigation was not about hospital pricing matters or about the class action lawsuits against non-profit hospitals over claims that they charge uninsured patients more for medical care than what insurers would pay for the same services. He declined to release Thomas' written request and would provide limited details about it. Ways and Means also did not release the letter.

Last summer, the Ways and Means Oversight Subcommittee held a hearing on the pricing practices of tax-exempt and for-profit hospitals. The session sent shock waves through the non-profit hospital sector, which fears such probes could lead to the loss of tax-exempt status. The House Energy and Commerce Committee has also conducted its own investigation.

Eighty-five percent of hospitals in the country are not-for-profit, and Thomas has questioned whether the type of care they provide to the poor is any different than care provided by for-profit hospitals.

"If in fact there are as many for-profits than can be (shown) to give a break to low-income as not-for-profits, then that's not really a difference for receiving that tax benefit," Thomas said at the June 22 hearing. "What is it that they do differently than people who pay taxes? I think we owe it to the tax payers to explore that question."

GAO investigators are also trying to talk to hospital groups about the charity care issue.

"Generally, we would like to learn about your data categories and definitions (such as what is included in uncompensated care); the process of data collection and review; the availability of hospital identifiers (e.g. Medicare provider number or other identifier), and the availability of other descriptive information (tax-exempt status during the given reporting year)," reads an e-mail from Mary Giffin, senior health policy analyst at GAO.

Ratner said Thomas made his request in November and that GAO personnel have been working with staff of the Ways and Means Oversight Subcommittee on the matter.

Ratner said GAO was in "mid-stream" with its investigation and has had "ongoing conversations" with committee staff. "We anticipate a hearing in May. We don't have details," he said.

A Ways and Means spokeswoman said the panel has not scheduled any hearings in May.

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